Globe and Mail Blog
April 12, 2011 6:23
Feeling the pinch from high prices at the pump? You’re not alone.
Nearly half of Canadians say rising prices for gas and food are having a “significant” impact on their household budgets, a national poll released Tuesday shows.
Forty-five per cent of respondents say food and pump prices are hitting their pocket books, according to the Royal Bank of Canada‘s quarterly confidence survey. One in four, or 38 per cent, say these prices haven’t had a big impact yet — but they’ve cut back on other expenses.
Food inflation in Canada is running at 2.1 per cent from a year ago, led by increases in bread, pork, potatoes, confectionery and coffee. Most economists expect food inflation to heat up this year due to higher commodity prices. On Monday, Tim Hortons raised the price of a large coffee by 7 cents; others are expected to follow suit.
Gasoline prices, meantime, have soared almost 25 per cent since late last year, according to a CIBC World Markets report Monday. If sustained, that equates to a 7-per-cent hike in the income-tax bill of households this year.
The RBC findings come as consumer confidence inched higher in March compared with its last survey in January. Six in ten respondents describe the economy as “good,” though a growing number are worried about a job loss or layoff.
Managing debt seems top of mind. When asked about peoples’ personal finance plans for the next year, the most common response, by 39 per cent of Canadians, was to pay off their debt as much as they can. Thirty per cent said they plan to spend less.
The survey was released on the same day the Bank of Canada makes its decision on interest rates. Rates are expected to stay on hold for now, though many economists think they’ll start climbing in July.
The survey of 3,520 Canadians was conducted in mid-March. Here is more of its findings:
Forty-two per cent think the economy will improve over this year – down a notch from the last survey.
Concern over a job loss or layoff rose to 22 per cent of respondents from 20 per cent, with people in Ontario the most concerned.
One in five said financially they are just keeping their heads above water.
Concern about rising gasoline and food prices is highest in Ontario, along with Atlantic Canada and Quebec.
Optimism about the economy this year is most upbeat in Alberta, followed by British Columbia and Manitoba/Saskatchewan.
The bank thinks a cooler housing market, rising interest rates and consumer efforts to pay down debts will slow the growth of debt levels.
- IMF warns Canadians on deteriorating family finances (theglobeandmail.com)
- Corporate tax cuts don’t spur growth, analysis reveals as election pledges fly (talesfromthelou.wordpress.com)