Results from a new Bank of Canada (BoC) survey show that Canadian consumers believe inflation is higher than it actually is, and they expect it to remain high despite data showing that it’s actually on the way down.
The BoC released the results of its survey of consumer expectations in October, reflecting the third quarter of 2023. The large perception gap is being attributed to the high price tags consumers are facing in stores.
Interest rate perceptions also remain high for the next year
Many consumers think increases in interest rates are raising the cost of living and keeping inflation high. The growing cost of living remains the most pressing concern for consumers. High inflation and rising interest rates have had a negative financial impact on most households and are causing more households than last quarter to reduce spending.
Many consumers believe the impacts of higher interest rates on their household spending are far from done. Those expecting more adverse effects ahead are less likely to plan major purchases. Overall, consumers reported that they’re more likely to spend on discretionary items like vacations and concerts than buy items usually financed with loans, such as cars or appliances.
Despite having a worsening outlook on the economy, workers still see the labour market as healthy. They also continued to report a higher-than-normal likelihood of voluntarily leaving their job, and their expectations for wage growth are now at a survey high. Consumers did, however, point to signs that the labour market is cooling. For instance, people are spending more time looking for a new job currently than in recent quarters.
Your mortgage agent is a great person to consult with any concerns pertaining to inflation, the housing market or your mortgage needs. Have questions? Answers are just a call or email away!