Despite the drop in the consumer price index (CPI) over the past few years, Canadians are still feeling the pinch of cost of living increases. The most recent survey from the Modalis Omnibus finds a large majority reporting a negative impact on financial well being.
Key findings in this release:
- Large numbers of Canadians say recent increases in cost of living is having a negative impact on their household finances.
- Few Canadians see any relief on cost of living on the horizon. This, despite a steady decline in Canada’s CPI over the same time period.
- Renters, lower income households, and those under 55 years of age are feeling the squeeze more acutely than other Canadians.
Fully 90 per cent of Canadians say the cost of living is having a negative impact.
Despite the official CPI easing greatly over the past two years, there has been a 10 point jump in those saying the cost of living increase over the past year is having a major negative impact on their financial well being.
Vulnerable Canadians are feeling the pinch most acutely.
- This is most acutely felt among low income households with almost 6 in 10 reporting a major negative impact on financial well being.
- Renters also report a much higher negative impact than homeowners. Further, three-quarters (74%) of renters spending 50% of gross income or more on rent are feeling a major negative impact, doubling the national average.
- Seniors and high income earners are least likely to report a major impact (both at just under a quarter).
Over half of Canadians continue to see the cost of living increasing greatly over the next year.
While the number saying the cost of living will increase greatly over the next year has pulled back slightly since 2022, it remains above half of all Canadians. Expectations for the cost of living track closely with those for housing costs, particularly rental prices.
- It is notable that the 2022 reading occurred just shortly after Canada’s CPI had peaked at 8.1% in mid-2022. Since then, the CPI has decreased greatly to just 2.0% in the most recent report from August.
- Despite the large declines in CPI and the number of Canadians expecting increased interest rates, there’s only been a slight pullback in cost of living expectations.
Continued high expectations for the cost of living may be explained to some extent by the persistent and increased expectations for escalation in the cost of housing.
- Renters have significantly higher expectations for a strong increase in cost of living than homeowners.
- Seniors (who have the highest incidence of home ownership) have the lowest level of expectations around a cost of living across age groups, while a majority of those under 55 expect a high increase.
Discussion
It has been well documented that increased living costs can have serious public health and quality of life implications (e.g., 2023 Lancet study). While the CPI has come down from its peak two years ago, Canadians are still feeling the effects. This is particularly true among some of the most vulnerable groups of Canadians.
The data presented here and elsewhere in our recent releases points to an elephant in the room – housing costs. Much more needs to be done to reduce these costs.
Methodology
These results come from the latest Modalis Omnibus which is powered by the Modalis Public Opinion Panel – 100% recruited using random probability telephone sampling. Unlike other research panels, Modalis contains no AI bots or ‘professional’ respondents.
Because the Modalis panel is built entirely using random probability sampling, it is valid to cite the margin of error for this survey. The survey is based on a representative sample of 1,604 Canadian adults and has a margin of error of +/- 2.4% points, 95 times out of 100. The survey data was collected from July 24 to August 7 and is weighted by age, gender, and region according to the latest Statistics Canada census.
