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

2022-10-03  4 minute read

Caryl Newbery-Mitchell

MNP Consumer Debt Index

  • Nearly half say it’s becoming less affordable to feed themselves and their family (48%, +6pts).
  • Two in five say transportation has become less affordable (43%, +10pts).
  • Nearly half are finding clothing or household necessities less affordable (44%, +7pts).

 

Toronto skyline at sunset with reflection of skyscrapers in the water

TORONTO, ON – October 3, 2022 – The impact of this year’s persistent inflation and consecutive interest rate hikes is becoming clear, as Ontarians voice concerns about the effect on their wallets. According to the latest MNP Consumer Debt Index, which is conducted quarterly by Ipsos, more Ontarians say life’s necessities are becoming less affordable amid the soaring cost of living. Compared to December 2021, significantly more say it’s becoming less affordable to feed themselves and their family (48%, +6pts), put money aside for savings (48%, +6pts), and to pay for transportation (43%, +10pts) and clothing or other household necessities (44%, +7pts).

“Ontarians are being forced to budget more of their paychecks towards basic living expenses as the cost of living rises. This chips away at any financial buffer they had to manage the impacts of this year’s interest rate hikes and any future rate increases,” says Caryl Newbery-Mitchell, a Licensed Insolvency Trustee with MNP LTD in Toronto.

While fewer Ontarians find themselves closer to insolvency (42%, -7pts), meaning they are $200 away or less from not being able to meet all of their financial obligations at the end of the month, the average Ontarian has less money to spend overall as they pay more for life’s necessities. The amount the average Ontarian has left over at month-end has decreased by $63 from the previous quarter to $697.

“The improvement in the number of Ontarians who are at risk of insolvency since last quarter is good news, but two in five individuals are still just $200 away from not being able to cover their bills and debt obligations,” says Newbery-Mitchell. “Now that Ontarians have less to spend each month, any increases to interest rates or the cost of basic necessities could push more individuals closer to insolvency.”

Yet while some Ontarians are in a vulnerable financial position, there is some optimism surfacing. More are now rating their personal debt situation as excellent (45%, +3pts) and fewer are rating it as terrible (15%, -3pts). When asked to forecast their expected debt situation a year from now, one in three expect their debt situation to improve (33%, +3pts) and fewer now believe it will worsen (10%, -4pts). Significantly fewer say they will be in financial trouble if interest rates go up much more (49%, -8pts), although the proportion still represents half of Ontario residents.

“We are seeing a newfound sense of optimism. However, this may be temporary. The effects of interest rate increases often reveal themselves over time, so what we are seeing now may be a false sense of optimism. Only time will tell the full impact, as the economic situation here is still unfolding,” Newbery-Mitchell says. “I urge Ontarians to be financially cautious as the situation continues to evolve.”

Newbery-Mitchell advises households to take a closer look at their budget and test whether 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, Newbery-Mitchell recommends contacting 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. including informal debt settlements, Consumer Proposals and Bankruptcy.

“Some think reaching out to a Licensed Insolvency Trustee is a last resort, but that doesn’t need to be the case. Seeking help at the first signs of distress ensures individuals have more debt-relief options available to them and can get a fresh start sooner,” says Newbery-Mitchell. “Unfortunately, some are in denial about their debt situation, or mistakenly perceive that their financial situation isn’t as bad as it really is — which often causes them to delay seeking help and prolongs their stress unnecessarily.”

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.