Reduced spending and inflation concerns persist in Canada | WARC | The Feed

Reduced spending and inflation concerns persist in Canada

Canadian consumers are cutting back on spending, with various demographics showing a heightened anxiety about the economy’s longer-term future, according to a Bank of Canada study.

Why it matters

The short-term impact of inflation leads many shoppers to change their purchasing decisions, an outcome that is likely to be a significant feature of 2023. At the same time, consumers have different views about the long term, and marketers will need to take these into account as they formulate their strategies.

Consumers are cutting back on expenses

The Bank of Canada’s latest survey of the Canadian Survey of Consumer Expectations, running between October 27th and November 17th 2022, found:

• Some 87.8% of consumers reported reducing their spending on travel in the last six months.
• Another 73.5% reported cutting their outlay on clothing and 58.3% said the same for groceries.
• Surveyed consumers are dedicating more of their budget to essential products.
• Opting for more affordable brands, purchasing in bulk and searching for discounts were all frequent responses to the cost-of-living crisis, too.

Inflation concerns aren’t abating

• Out of the three surveyed income brackets – those making less than C$40,000 (US$29,875), those making between C$40,000 to C$100,000, and those making over C$100,000 – consumers in the first income bracket reported the most anxiety over inflation.
  
• Moreover, the study found that the surveyed 18–24-year-old age bracket had more worries than 25–54-year-olds and people aged 55 years old and above.
• Canadians who identified as minorities and those with disabilities reported a heightened anxiety about the next five years compared with the general consensus expectation of what the next five years will bring.

Sourced from Bank of Canada