Rising interest rates and inflation forcing Albertans to make tough budget decisions to make ends meet

A third will cut back on essentials such as food, utilities and housing; nearly half will cut back on non-essentials such as travelling, dining out and entertainment.

• Nearly seven in 10 say they’re already feeling the effects of interest rate increases (68%, +10pts), more than any other province.
• A third are cutting back on essentials such as food, utilities, and housing (33%), more than any other province.
• Nearly half say they’re cutting back on non-essentials such as travelling, dining out, and entertainment (48%).
• A third are buying cheaper versions of everyday purchases (39%) and driving less (32%).
• Three in 10 say they’re not financially prepared to deal with an interest rate increase of one percentage point (31%), more than any other province.

CALGARY, AB – July 11, 2022 – Albertans are becoming acutely aware of the impact interest rates and inflation have on their household budgets, as both continue on their months-long upward trajectory. Compared to the other provinces, Albertans are the most likely (68%) to say they’re already feeling the effects of interest rate increases, jumping a staggering 10 points since last quarter, according to the latest MNP Consumer Debt Index, conducted quarterly by Ipsos on behalf of MNP LTD.

Many are being forced to make tough budget decisions to make ends meet, with nearly half (48%) saying they are cutting back on non-essentials such as travelling, dining out, and entertainment. A third of Albertans are buying cheaper versions of everyday purchases (39%) and driving less (32%). Albertans are the most likely (33%) to be making the difficult decision to cut back on essentials such as food, utilities, and housing compared to the other provinces. Only one in 10 (11%) say they don’t have any increased expenses to pay for.

"There is no reprieve, no matter where Albertans turn. The reality is food is more expensive; housing is more expensive; driving a car is more expensive," says Donna Carson, a Licensed Insolvency Trustee with Alberta-based MNP LTD. "Many households are modifying their budgets and cutting costs where they can to manage their monthly bills. Unfortunately, it’s likely to get worse before it gets better. Households will have to make more difficult choices about what to cut as the cost of living continues to rise, and many could find themselves taking on debt to get by."

Further indication that Albertans could be in for a rough rest of the year, nearly six in 10 (58%, unchanged) say they'll be in financial trouble if interest rates go up much more. Almost half (45%, -5pts) believe rising rates could drive them closer to Bankruptcy.

Despite being down three points since last quarter, Albertans are the most likely (31%) to say they're not financially prepared to deal with an interest rate increase of one percentage point. They’re also the most likely to say they’re concerned about the impact of rising interest rates on their financial situation (64%, +3pts). Nearly half (47%, unchanged) are concerned about their ability to cover all living / family expenses in the next year without going further into debt.

"There's mounting pressure for more aggressive interest rate hikes to tame inflation, which is nearing a 40-year high. Albertans who are not financially prepared to absorb further interest rate increases are likely to find themselves in financial trouble as they become unable to keep up with the rising costs of their debt repayment obligations," says Carson.

While the vast majority of Albertans (87%, +7pts) say they’ll be more careful about how they spend their money with interest rates rising, two in three (66% unchanged) are more concerned about their ability to pay their debts — more than any other province. About half say they’re both concerned about their current level of debt (45%, -5pts) and that they regret the amount of debt they’ve taken on in life (51%, +4pts).

Carson advises those concerned about upcoming bills and debt repayments to speak with a federally-regulated Licensed Insolvency Trustee who can help determine the best debt-relief solution through a confidential and unbiased assessment of their financial situation.

"At a certain point, even the tightest budget may not be enough to help someone fend off their financial issues," says Carson. "Licensed Insolvency Trustees are the only debt professionals who can offer the full range of debt-relief options to release individuals from their debts and help them obtain a fresh financial start, including Consumer Proposals and Bankruptcy."

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 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-first wave, the Index has increased three points since last quarter to 90 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 June 6 and June 9, 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.

A summary of some of the national data is available by request.