According to the RBC Canadian Consumer Outlook Index, Canadians are delaying vacation plans, shopping around for groceries, following their budget more closely and holding onto their older vehicles, thanks to rising gas and food prices.
With gas prices rising 29.5 percent in May alone (the biggest jump since September 2005) and food prices climbing 4.2 percent in the same month, Canadian consumers are taking practical solutions that include:
- Increasing their comparison shopping for food (55 percent)
- Following their budget more than before and buying less on impulse (48 percent)
- Using their vehicles less, making fewer trips and using public transit/walking more (29 percent)
Changing economic factors limit vacation planning and new vehicle purchases. Almost one-third (30 percent) of Canadians report that they are more likely to delay vacation plans until 2012 and an almost equal number (31 percent) are delaying getting a new vehicle and making do with their present one longer than usual.
At the same time, Canadians estimate that they are carrying an average of $13,058 in personal debt (not including mortgages). In addition, fewer feel confident they are managing all their debts well, compared to the previous quarter (30 percent versus 38 percent). Reducing what they owe (32 percent) tops the list of personal financial measures Canadians are planning this year, followed by spending less (28 percent) and saving or investing more (24 percent), while 21 percent say they will be taking all of these actions.
“Canadians are continuing to focus on managing their debts – a very good sign as we enter the second half of the year,” says RBC Personal Lending Vice-President Richard Goyder. “It’s encouraging to see consumers are trying to live within their means and seeking out very practical ways to not only pay their bills but also to save and invest. Personal financial advice can be an excellent source of ideas to help ensure Canadians carry out these very good financial intentions.”
Four-in-ten Canadians (39 percent) expect their personal financial situation to improve over the next year, while a similar number (42 percent) are optimistic that the national economy will improve over the same time period.
The most recent RBC Economic Outlook, meanwhile, projects positive growth right through 2012.
“Overall, we’re forecasting that the Canadian economy will grow at a respectable clip over the next two years,” says RBC Senior Vice-President and Chief Economist Craig Wright. “Supported by the continued economic recovery being projected for the U.S., we expect Canada’s economy to expand by 3.2 percent in 2011 and 3.1 percent in 2012.”
RBC’s Index is Canada’s most comprehensive consumer assessment of the economy, personal financial situation and economic and purchasing expectations. Other highlights from Index include:
- RBC Canadian Consumer Outlook Index: Overall, the RBC CCO Index is at 94 points, down two points from April 2011.
- National Economic Outlook by Region: Albertans are the most optimistic that the Canadian economy will improve over the next year (59 percent), followed by residents of Saskatchewan/Manitoba (46 percent), B.C. (46 percent), Ontario (44 percent), Atlantic Canada (41 percent) and Quebec (27 percent). Nationally, 42 percent of Canadians expect to see improvements in the national economy over the upcoming year.
- Personal Financial Situation Outlook by Region: Alberta and Saskatchewan/Manitoba lead the country in optimism that their own personal financial situation will improve over the next year (47 percent and 41 percent respectively), followed by B.C. and Ontario (38 percent each), Atlantic Canada (37 percent) and Quebec (36 percent). Across Canada, 39 percent expect to see improvements in their own personal financial situation.
- Job Anxiety Outlook by Region: At 27 percent, residents of Ontario are expressing the most concern about the outlook for job loss or layoffs in the upcoming year, followed by people living in Alberta (20 percent), Atlantic Canada, Quebec and B.C. (18 percent each) and Saskatchewan/Manitoba (16 percent). Nationally, 22 percent of Canadians are expressing job anxiety.
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