Consumer Debt Index highlights impact of affordability crisis: More British Columbians say necessities such as food, housing and transportation are less affordable

2022-10-03  4 minute read

Linda Paul

MNP Consumer Debt Index

  • Half say it is becoming less affordable to feed themselves and their family (51%, +6pts).
  • Nearly half say transportation has become less affordable (46%, +9pts).
  • Two in five say housing has become less affordable (40%, +6pts).

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VANCOUVER, BC – October 3, 2022 – The impact of this year’s persistent inflation and consecutive interest rate hikes is becoming clear as British Columbians worry about the effect on their wallets. According to the latest MNP Consumer Debt Index, which is conducted quarterly by Ipsos, more British Columbians say life’s necessities are becoming less affordable. Compared to December 2021, significantly more say it is becoming less affordable to feed themselves and their family (51%, +6pts), put money aside for savings (53%, +9pts), pay for transportation (46%, +9pts), and pay for housing (40%, +6pts).

“British Columbians are allocating more of their paychecks to paying for basic necessities as the cost of living rises. This in turn means there is less of a buffer in their budget to cope with the effects of recent interest rate hikes and any future increases,” says Linda Paul, a Licensed Insolvency Trustee with MNP LTD in the Lower Mainland.

While fewer British Columbians find themselves closer to insolvency since last quarter (42%, -5pts), meaning they’re $200 away or less from not being able to meet all of their financial obligations at the end of the month, the average British Columbian has less money remaining overall as they pay more for life’s necessities. The amount the average British Columbian has left over at month-end has decreased by $118 from the previous quarter to $753.

“Compared to last quarter, fewer British Columbians are now at risk of insolvency, but two in five are still just $200 away from not being able to cover their bills and debt obligations,” says Paul. “Any future interest rate increases or increases to the cost of everyday goods could push a lot of British Columbians back toward the danger zone, particularly now that they have less room in their budgets.”

Yet while some British Columbians are in a vulnerable financial position, there is some optimism surfacing. Compared to the other provinces, British Columbians are the most likely to rate their personal debt situation as excellent (49%), jumping 13 points since last quarter — and significantly fewer are rating it as terrible (10%, -10pts). When asked to forecast their expected debt situation a year from now, three in 10 expect their debt situation to improve (29%, +4pts), but far fewer now believe it will worsen (8%, -8pts).

“The economic situation here is still unfolding, so the optimism we’re seeing could be only temporary — only time will tell what the full impact will be. We tend to see the effects of interest rate hikes surface over time, so we may be seeing a false sense of optimism,” Paul points out. “I would encourage individuals to be especially cautious with their finances heading into the holiday season.”

Paul advises households to take a closer look at their budget and test whether or not they would be able to cover all of their bills if the costs of their daily purchases and debts continue to rise. If more debt would be required to subsidize those bills, Paul says they should contact a Licensed Insolvency Trustee for an unbiased assessment of their financial situation and the available debt-relief options. Licensed Insolvency Trustees are government-regulated and they’re the only professionals who can provide the full range of debt-relief options which include informal debt settlements, Consumer Proposals, and Bankruptcy.

“Sometimes individuals are in denial about how bad their financial situation is. Others may not realize how bad things really are. Unfortunately, those people often delay reaching out for help, which not only prolongs their stress, but it also reduces the number of debt relief options that may be available to them,” says Paul. “Reaching out to a Licensed Insolvency Trustee at the first signs of financial distress can help ensure you receive a financial fresh start sooner — it doesn’t have to be a last resort.”

The proportion of British Columbians who say they’re more concerned about their ability to pay their debts as interest rates rise has remained relatively consistent since last quarter, at 51 percent (-2pts). Also remaining relatively stable since last quarter, nearly half (48%, -1pt) say they will be in financial trouble if interest rates go up much more.

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 240 offices from coast to coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3-Minute Debt Break Podcast.

About the MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians.

Now in its twenty-second wave, the Index has increased two points since last quarter to 92 points, although remaining well below its benchmark score established five years ago. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between September 6 and September 13, 2022. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.

National data is available upon request.