70% of B.C. residents say they're feeling the pinch of the rising cost of living
If you’ve felt uneasy about the state of the world and your finances lately, you’re not alone: over half of British Columbians reported feeling ‘financial whiplash’ this year, due to changing conditions disrupting their financial plans.
Seventy per cent of B.C. residents said rising prices for things like food and gas are straining their finances, 67 per cent reported cutting back on spending, and 83 per cent said they’re more cautious about taking on new debt.
MNP Ltd., Canada’s largest insolvency firm, published its most recent quarterly consumer debt index on Monday, April 13, where it looked at Canadians’ ability to pay their bills, cover unexpected expenses, and absorb interest-rate fluctuations.
“Across B.C., many households are adjusting to conditions that continue to change, often faster than they can plan for,” said Linda Paul, a licensed insolvency trustee with MNP LTD in the Lower Mainland, in a release.
“That sense of ‘financial whiplash’ can make it difficult to feel stable or in control, especially when high everyday costs and broader economic uncertainty are largely outside of what an individual can control. Over time, this can make it harder to manage unexpected expenses or move forward with larger financial decisions.”
With tax season in full swing, MNP found that 10 per cent of B.C. residents expect to owe taxes they won’t be able to pay.
“Tax season can be a revealing moment for household finances,” said Paul. “While some British Columbians may use a refund to catch up or reduce debt, others may find themselves needing to draw on savings or take on additional credit to meet their tax obligations, which can add to financial strain over time.”
Some financial indicators are improving, but not for everyone
However, it’s not all bad news: the average amount British Columbians have left at month-end is at an all-time high of $1,245 — up from $1,025 last quarter.
Further, there are fewer B.C. residents reporting that they are within $200 or less of being unable to meet their monthly financial obligations. MNP reported it was 37 per cent, down from 45 per cent the quarter before.
While there were still 24 per cent of respondents who said they already aren’t making enough money to pay their bills or debt payments, it is down slightly (by two 2 cent).
“However, these gains are not being felt equally across all households, and while conditions have improved for some, financial vulnerability remains for many,” reads the release.
The index also found that over half “feel they are working harder financially but not getting ahead.” Nearly two-thirds said they are deciding to delay big financial decisions due to conditions feeling unpredictable.
How does the Bank of Canada’s interest rate factor into this?
On March 18, the Bank of Canada (BoC) held its key interest rate at 2.25 per cent.
This could “ease distress” for some British Columbians, but 55 per cent said they still need interest rates to come down.
Forty-one per cent said they “fear financial trouble if rates rise,” and 39 per cent said they are worried that “rising rates could move them toward bankruptcy.”
“Even small increases in interest rates could have an impact, as just one-quarter (26%) say they could absorb an additional $130 in monthly interest payments, while nearly one-third (30%) say they could not,” reads the release.