The surge of inflationary fever continues to surprise analysts. For individuals and households, the increase in the cost of living and the rise in the cost of money are now dominating in the financial stress felt.
The Statistics Canada data surprised. The consumer price index (CPI) rose 6.7% year over year in March, up one percentage point from the 5.7% growth rate recorded in March. february. This is the largest increase since the 6.9% increase in January 1991, when the goods and services tax was introduced. The increase also reached 6.7% in Quebec last month.
Even excluding the volatile components of food and energy, the surge is 4.6%, well above the Bank of Canada’s headline CPI target range of 1-3% . The central bank’s three favored measures of inflation continued to accelerate, averaging 3.8% from 3.1% in December, with March’s average the strongest pace in more than three decades , underline the economists of the National Bank. In short, the data for March is surprising. And it exceeded consensus expectations for a third consecutive month, they write.
Inflation as measured by the CPI is always felt more strongly on the price of basic products, meeting essential needs. Year over year, consumers paid 8.7% more for food purchased from stores last month. Compounding the higher bill was a 39.8% year-over-year increase in gas prices in March. In addition to gas and food, among the factors that contributed the most to the rise in the CPI in March were what is known as homeowners’ replacement cost (+12.9%), other expenses for owned accommodation (+16.9%) and rent (+4.1%).
Without other surprises, March could constitute a peak for annual inflation due to the base effect, raise the economists of the National. If so, it will not be easily reversed, given the geopolitical reality, lingering supply chain issues exacerbated by the Chinese government’s zero COVID-19 policy, and labor market tensions leaving expect a higher salary increase. Statistics Canada also recalled that employment had continued to increase last month. The unemployment rate thus reached a record low, while the average hourly wage of employees increased by 3.4% from one year to the next, or half of the CPI.
strong concerns
Not surprisingly, then, that the latest polls show that individuals and households are experiencing particularly strong inflationary stress, amplified by a rise in interest rates that is likely to be stronger than initially expected. Survey results released Wednesday by TD Wealth Management show that soaring inflation topped personal finance concerns for 87% of Canadian respondents, followed by the cost of living for 84% of them.
Of course, “young people (under 35) are significantly more likely than their elders to worry about housing prices (80% vs. 54%), rising interest rates (71% vs. 49% ), fluctuations in the market (71% vs. 66%), their salary or ability to earn an income (67% vs. 43%) and job security (47% vs. 24%),” perhaps we read in this survey with a margin of error of plus or minus 2%, 19 times out of 20.
Quebecers are talking about the long-term financial impact of COVID-19 as well as pressure from rising interest rates and the cost of living, according to the recent Consumer Debt Index from MNP. Thus, 45% of respondents, four percentage points more than in the previous quarter, say they are already feeling the effects of the rate hike. The majority, 53% of those polled, are more concerned about their ability to repay their debts, a jump of six percentage points since December. They are 35% (+1 point) to fear that increased interest rates could lead them to bankruptcy, adds the survey compiled by the firm Ipsos, which includes a margin of error of plus or minus 2.5%, 19 times out of 20.
At $200 or less
“The affordability crisis, fueled by the rising cost of living and interest rates, is increasing financial pressure,” summarizes Frédéric Lachance, Licensed Insolvency Trustee at MNP’s Montreal office. More broadly, 55% (+4 points) of people say they are concerned about their financial situation in the event of an increase in interest rates and 18% (+3 points) say they are not ready to assume a one-point increase. percentage.
In more detail, 48% of respondents say they are $200 or less away from being able to meet their financial obligations, up seven points since December. Of this number, 29% (+6 points) maintain that their income is already not enough to pay their bills and repay their debts. In addition, the average amount available to Quebecers at the end of the month fell to $670, a decline of $133 since December, the survey adds.