Prices Increasing and Spending Decreasing
September 12, 2022
Prices are increasing so Canadians are reducing their spending, writes Peter Watson.
The annual inflation rate as of the end of July decreased slightly to 7.6 per cent. That is good news for the Bank of Canada who are trying to control inflation.
The reality is things are significantly more expensive than one year ago and this is starting to take a toll on many Canadians. A recent survey by Angus Reid Institute reported that “Canadians are responding to price increases with spending decreases.”
Eighty per cent of Canadians have reduced their spending. This was done by reducing discretionary spending, delaying a major purchase, driving less, and cutting back on travel and charitable donations.
People are also deferring saving. That is understandable, you cannot save what you do not have. However, this will have negative implications down the road.
Almost 80 per cent feel grocery stores are benefiting from inflation by increasing prices more than necessary. Less than 10 per cent think that higher grocery chain profits are due to good management.
Three quarters of Canadians are stressed about money, and over half the people surveyed by Angus Reid said they were not able to keep up with the rising cost of living.
Inflation will eventually be controlled and return to the 2% target set by the Bank of Canada.
Try to manage your spending so you do not end up increasing your amount of debt.
Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com
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