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

Three in 10 will cut back on essentials such as food, utilities and housing; nearly half will cut back on non-essentials such as travel, dining out and entertainment

• Six in 10 say they’re already feeling the effects of interest rate increases (64%, +7pts).
• Half say rising rates could drive them closer to Bankruptcy (49%, +6pts), more than any other province.
• Nearly half say they’re cutting back on non-essentials such as travelling, dining out, and entertainment (45%).
• About two in five are buying cheaper versions of everyday purchases (41%) and driving less (36%).
• Three in 10 are cutting back on essentials such as food, utilities, and housing (30%).

ST. JOHNS, NL – July 11, 2022 – Atlantic Canadians are becoming acutely aware of how rising interest rates and inflation impact their household budgets, as both measures continue on a months-long upward trajectory. Increasing a staggering seven points since last quarter, six in 10 (64%) Atlantic Canadians say they’re already feeling the effects of interest rate increases, according to the latest MNP Consumer Debt Index, conducted quarterly by Ipsos on behalf of MNP LTD.

Compared to the other provinces, Atlantic Canadians are the most likely (49%) to say rising rates could drive them closer to Bankruptcy, up a significant six points.

Many Atlantic Canadians are having to make tough budget decisions to make ends meet. Nearly half (45%) say they’re cutting back on non-essentials such as travel, dining out, and entertainment, while about two in five are buying cheaper versions of everyday purchases (41%) and driving less (36%). Three in 10 (30%) are making the difficult decision to cut back on essentials such as food, utilities, and housing. Only one in 10 (10%) don’t have any increased expenses to pay for.

“There’s no relief for Atlantic Canadian households, no matter where they look. Housing is more expensive; driving a car is more expensive; food is more expensive,” says Greg Gosse, a local Licensed Insolvency Trustee with MNP LTD. “Atlantic Canadians are doing their best to adjust their budgets, but households will face increasingly difficult choices about what to cut as the cost of living continues to soar. Some could find themselves piling on debt to keep up with their monthly bills.”

As further indication that Atlantic Canadians could be in for a rough rest of the year, nearly six in 10 (58%, +2pts) say they’ll be in financial trouble if interest rates go up much more. More than a quarter (27%) say they’re not financially prepared to deal with an interest rate increase of one percentage point, up a substantial seven points from last quarter.

Dipping just below the national average, 56 percent (-8pts) of Atlantic Canadians say they’re concerned about the impact of rising interest rates on their financial situation. Nearly half (47%, -1pt) are concerned with their ability to cover all living / family expenses in the next year without going further into debt. The proportion who are concerned about the impact of rising interest rates is up six points since June 2017.

“The cost of living is likely to get worse before it gets better. Inflation is nearing a 40-year high, and there is increasing pressure for more aggressive interest rate hikes to help tame it. Debt repayments will become more costly at higher rates — and unmanageable for some. Atlantic Canadians who aren’t financially prepared to absorb future interest rate increases could find themselves in financial trouble,” says Gosse.

Nearly six in 10 (57%, -11pt) say they’re more concerned about their ability to repay their debts as interest rates rise. Though no longer the highest proportion among the provinces, this measure remains above the national average. Fewer are concerned about their current level of debt (40%, -7pts) or regret the amount of debt they’ve taken on in life (43%, -3pts). Yet the vast majority of Atlantic Canadians (85%, -2pts) agree they’ll be more careful how they spend their money with interest rates rising.

Gosse 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.

“A strict budget will help some get through these challenging times, but it may not be enough for those with deeper financial troubles,” says Gosse. “Only Licensed Insolvency Trustees can provide the full range of options to release individuals from their debts and help them achieve a fresh financial start, including Consumer Proposals and Bankruptcy.”

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.