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

One-quarter will cut back on essentials such as food, utilities, and housing; two in five will cut back on non-essentials such as travelling, dining out, and entertainment

  • Half say they are already feeling the effects of interest rate increases (50%, +5pts).
  • Four in 10 say that rising rates could drive them closer to bankruptcy (41%,+6pts).
  • Two in five say they are cutting back on non-essentials such as travelling, dining out, and entertainment (44%).
  • A third are buying cheaper versions of everyday purchases (35%) and a quarter are driving less (24%).
  • A quarter are cutting back on essentials such as food, utilities, and housing (25%).
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MONTREAL, QC – July 11, 2022 – Quebecers are becoming acutely aware of how interest rates and the cost of necessities impact their household budgets, as both continue on a months-long upward trajectory. Increasing five points since last quarter, half (50%) of Quebecers say they’re already feeling the effects of interest rate increases, according to the latest MNP Consumer Debt Index which is conducted quarterly by Ipsos on behalf of MNP LTD.

Many Quebecers are now being forced to make tough budget decisions to make ends meet, with two in five (44%) saying they’re cutting back on non-essentials such as travelling, dining out, and entertainment. A third of Quebecers are buying cheaper versions of everyday purchases (35%) and a quarter are driving less (24%). A quarter (25%) are making the difficult decision to cut back on essentials such as food, utilities, and housing. Only one in 10 (14%) are fortunate enough to say they don’t have any increased expenses to pay for.

“No matter where Quebecers turn, life is more expensive. Food is more expensive; housing is more expensive; driving a car is more expensive. There’s no relief,” says Frédéric Lachance, a Licensed Insolvency Trustee with MNP LTD in Montreal.

“Many households are adjusting their budgets and cutting costs where they can. But with the cost of living likely to get worse, households will have to make increasingly difficult decisions about what to cut from their budget — and some may resort to taking on debt to make ends meet.”

As further indication that Quebecers could be in for a rough rest of the year, nearly half (48%, +2pts) say they will be in financial trouble if interest rates go up much more. Four in 10 (41%) say rising rates could drive them closer to Bankruptcy, a significant six-point jump since last quarter.

One in five (22%) say they’re not financially prepared to deal with an interest rate increase of one percentage point, up four points from last quarter. Moreover, more than half of Quebecers say they’re concerned about the impact of rising interest rates on their financial situation (54%, +1pt) and their ability to cover all living / family expenses in the next year without going further into debt (55%, unchanged). The proportion who are concerned about the impact of rising interest rates is up seven points since June 2017.

“There is increasing pressure for more aggressive interest rate hikes to tame inflation which is now nearing a 40-year high. Quebecers who aren’t financially able to absorb future interest rate increases will likely struggle to cope with the rising costs of servicing their debt repayment obligations,” says Lachance.

While the vast majority of Quebecers (80%, -3pts) agree they’ll be more careful with how they spend their money, more than half (55%, +2pts) say they’re more concerned about their ability to pay their debts with interest rates rising. Two in five say they’re concerned about their current level of debt (40%, +2pts) and regret the amount of debt they’ve taken on in life (40%, -3pts).

Lachance 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.

“Even the tightest budget may not be enough to solve an individual’s financial issues,” says Lachance. “Those who are experiencing unfortunate circumstances and severe financial stress should seek the help of a debt professional. Only Licensed Insolvency Trustees can offer the full range of debt-relief options, including Consumer Proposals and Bankruptcy, to release individuals from their debts and provide the fresh financial start they deserve.”

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.