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

A quarter 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.

  • Six in 10 say they’re already feeling the effects of interest rate increases (59%, +6pts).
  • Nearly half say they’re cutting back on non-essentials such as travelling, dining out, and entertainment (47%).
  • A quarter are cutting back on essentials such as food, utilities, and housing (26%).
  • A quarter say they’re not financially prepared to deal with an interest rate increase of one percentage point (26%, +10pts), increasing more than any other province.
  • Nearly half say they’re concerned about their current level of debt (47%, +11pts), increasing more than any other province.
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VANCOUVER, BC – July 11, 2022 – British Columbians are becoming acutely aware of how interest rates and inflation impact their household budgets as both continue on their months-long upward trajectory. Increasing a staggering six points since last quarter, six in 10 (59%) British Columbians say they're already feeling the effects of interest rate increases, according to the latest MNP Consumer Debt Index, conducted quarterly by Ipsos on behalf of MNP LTD.

Many British Columbians are now being forced to make tough budget decisions to make ends meet, with nearly half (47%) saying they're cutting back on non-essentials such as travelling, dining out, and entertainment. Three in 10 are buying cheaper versions of everyday purchases (32%) and driving less (29%). A quarter (26%) are making the difficult decision to cut back on essentials such as food, utilities, and housing. Only one in 10 (12%) are fortunate enough to say their expenses have not increased.

"Housing is more expensive; driving a car is more expensive; food is more expensive. No matter where British Columbians look, there is no relief," says Linda Paul, a Licensed Insolvency Trustee with MNP LTD in the Lower Mainland.

"While many households in B.C. are trying to adjust their budgets by cutting costs where they can, it's likely to get worse before it gets better. Households will have to make even tougher decisions about what to cut as the cost of living continues to rise — and many could find themselves piling on debt to keep up with their monthly bills."

As further indication that British Columbians could be in for a rough rest of the year, half (49%, -2pts) say they'll be in financial trouble if interest rates go up much more. Four in 10 (41%) say rising rates could drive them closer to Bankruptcy, increasing a significant six points since last quarter.

A quarter (26%) say they're not financially prepared to deal with an interest rate increase of one percentage point, up a staggering 10 points from last quarter, the largest increase amongst the provinces. Moreover, nearly six in 10 British Columbians say they're concerned about the impact of rising interest rates on their financial situation (56%, +3pts) and their ability to cover all living / family expenses in the next year without going further into debt (54%, +4pts). The proportion of those who are concerned about the impact of rising interest rates is up 13 points since June 2017.

"Inflation is nearing a 40-year high, and we're seeing intensifying pressure for more aggressive interest rate increases to tame that inflation as a result. British Columbians who aren't financially prepared to absorb more interest rate hikes will likely find themselves in financial difficulty as the costs of their debt repayment obligations become increasingly unmanageable," says Paul.

While fewer (53%, -7pts) British Columbians say they're more concerned about their ability to pay their debts as interest rates rise, the vast majority (83%, +2pts) agree they will be more careful with how they spend their money. Significantly more (47%) say they're concerned about their current level of debt, jumping 11 points since last quarter — the largest increase amongst the provinces. Two in five (44%, +4pts) say they regret the amount of debt they've taken on in life.

Paul 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.

"Sometimes, even the strictest budget may not be enough to help an individual avoid serious financial problems," says Paul. "That's where a Licensed Insolvency Trustee can help. They're the only debt professionals who can provide the full range of options to release individuals from their debts and help them achieve 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 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-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.