An insolvency firm says British Columbians remain worried about worsening economic conditions and how they will manage their debts; however, a strong job market at this time has meant they are adjusting, despite less money in their pockets.
“There is no mystery as to what is causing financial stress among British Columbians: it’s getting increasingly difficult to make ends meet,” said MNP LTD licensed insolvency trustee Linda Paul.
“There is growing concern over the potential for continued interest rate hikes in addition to the related increase in debt carrying costs and living expenses, as many household budgets are already stretched thin.”
MNP ran a poll with Ipsos Reid finding a slight uptick in concerns about financial troubles and possible bankruptcy. Three in five are worried about the former whereas about half of the population worries of the latter.
Th poll found the average amount of money that British Columbians say they have left over at the end of the month dropped this quarter to $681, down $166 from the previous quarter.
But, because of a tight labour market fewer report that they are $200 away or less from not being able to meet all their financial obligations (46 per cent, down from 52 per cent, last quarter).
“For now, the number who report debt concern has declined. This could be a result of the strong job market. The uncomfortable truth is that as higher interest rates slow the economy, there will inevitably be some consequences like increased unemployment,” said Paul, who warned about using credit to get by.
“When income remains consistent, the ever-increasing cost of living may be somewhat manageable but with an unexpected loss of income it suddenly becomes troublesome, even after cutting back on non-essential spending,” she said. “That’s when the danger of relying on credit to meet basic household needs becomes a real risk.
Consumer prices in B.C. rose 3.3 per cent last month — down from 3.8 per cent in August, according to Statistics Canada data released Tuesday (Oct. 17). That national inflation rate, meanwhile, cooled to 3.8 per cent. That’s down from four per cent in August.
“Alongside other measures that have shown momentum is cooling in Canada's economy, we see enough evidence for the [Bank of Canada] to stand on the sidelines next week," said TD economist Marc Ercolao in a note Tuesday.
