TORONTO: Canadian consumers plan to cut back their spending across many product categories this year, just as they did in 2014, as their outlook for the economy remains gloomy, a new report has warned.
Based on a poll of 1,500 Canadians conducted by the Gandalf Group, the 2015 Bensimon Byrne Consumerology Report found nearly nine-in-ten (85%) believe the cost of living is outstripping their income.
And for the first time since November 2009, more Canadians believe the country's economy is in decline (55%) than believe it is growing (45%).
A majority in every region, except Alberta and the Prairies, believe Canada is heading in the wrong economic direction and citizens in Quebec are the most negative about the economy, both nationally and for their own province.
These concerns have prompted Canadians to try to pay down their debts as quickly as possible, the report said, and consumers are making "a conscious effort" to minimise spending and maximise savings.
Advertising agency Bensimon Byrne says it aims to establish how "macro" issues can affect trends at the "micro" level and its latest Consumer Spending Index, now in its third year, provides unsettling news for marketers in Canada.
A headline score of 100 or more indicates that consumers plan to spend more in the coming year, yet this year's Index score is 90.6. This means consumers plan to cut their spending for the third year in a row.
The Index also contains two sub-indices, each with a baseline score of 50, which track discretionary spending and essential spending, the latter covering taxes, internet, groceries, petrol, auto maintenance, electricity and children's clothing.
This year's essential spending score is 49, just below the baseline, but the discretionary spending score is only 41.6, leading the report to warn that "Canadians plan on decreasing their discretionary spending significantly" despite low interest rates and record-low oil prices.
"They cannot be counted on to consume above their means and fuel economic recovery until take-home wages go up," the report concluded.
Data sourced from Bensimon Byrne; additional content by Warc staff