Consumer Debt Index highlights impact of affordability crisis: More Quebecers say necessities such as food and transportation are less affordable

• More than half say it’s becoming less affordable to feed themselves and their family (52%, +1pt).
• Two in five say transportation has become less affordable (41%, +8pts).
• Two in five are finding clothing or household necessities are less affordable (41%, unchanged).
• Two in five say it is becoming less affordable to put money aside for savings (42%,+4pts).

MONTREAL, QC – October 3, 2022 – The impacts of this year’s persistent inflation and consecutive interest rate hikes are becoming clear as Quebec residents voice concerns about the effect on their wallets. According to the latest MNP Consumer Debt Index, which is conducted quarterly by Ipsos, more Quebecers say the soaring cost of living is making life’s necessities less affordable. Compared to December 2021, more say it is becoming less affordable to feed themselves and their family (52%, +1pt), put money aside for savings (42%, +4pts), and pay for transportation (41%, +8pts). Additionally, two in five (41%, unchanged) are finding clothing or other household necessities unaffordable.

More than half of Quebecers (54%, unchanged) say they’re concerned about the impact of rising interest rates on their financial situation. Furthermore, significantly fewer (14%, -12pts) say they’re better equipped to absorb an interest rate increase of one percentage point than they used to be, while more (22%, +4pts) say their ability to deal with this increase has worsened.

“Quebecers’ are seeing more of their paychecks going towards basic necessities as the cost of living rises. As a result, they have less of a financial buffer to manage the effects of previous, and any further interest rate hikes,” says Frédéric Lachance, a Licensed Insolvency Trustee with MNP LTD in Montreal.

Yet, while more Quebecers are finding life’s necessities less affordable, far fewer are finding themselves closer to insolvency (49%, -10pts), meaning they’re $200 or less away from not being able to meet all of their monthly financial obligations. In fact, the average Quebecer has more money overall to spend at month-end — growing by $71 from the previous quarter to $622.

“There has been a considerable improvement in the number of Quebecers who are at risk of insolvency since last quarter. But keep in mind half of Quebecers are still just $200 away from not being able to cover all of their bills and debt obligations,” says Lachance. “Any additional increases to interest rates or the price of everyday goods could push individuals towards insolvency.”

Some optimism is surfacing along with the modest improvement to Quebecers’ budgets. More are now rating their personal debt situation as excellent (46%, +5pts) and fewer are rating it as terrible (10%, -4pts). When asked to forecast their expected debt situation a year from now, fewer expect their debt situation to worsen (9%, -4pts). Compared to the other provinces, Quebecers are the least likely to say they’re more concerned about their ability to pay their debts as interest rates rise (45%,-10pts) —the largest drop in concern since last quarter. They are also the least likely to say they will be in financial trouble if interest rates go up much more (44%, -4pts).

“The economic situation is continuing to unfold and only time will tell what the full impact will be. This recent optimism may be short-lived, as the effects of rising interest rates often reveal themselves in time — which is why we may be seeing a false sense of optimism right now,” Lachance points out. “Something else to note: we generally see higher levels of optimism in the summer and more pessimism heading into the winter months. I would advise Quebecers to approach this year’s holiday season with a cautious mindset when it comes to their finances.”

Lachance advises households to take a closer look at their budget and test whether they would be able to cover all their bills if the costs of daily purchases and debts continue to rise. If they would require more debt to subsidize those bills, Lachance recommends seeking the help of a Licensed Insolvency Trustee who can provide an unbiased assessment of their financial situation and present the available debt-relief options. Licensed Insolvency Trustees are government-regulated and are the only professionals who can provide the full range of debt-relief options, including informal debt settlements, Consumer Proposals, and Bankruptcy.

“Some misunderstand their financial situation and don’t think it is as dire as it really is. Others are in denial about the severity of their debt issues. This often causes people to delay getting the help they need and prolongs unnecessary stress,” says Lachance. “Speaking with a Licensed Insolvency Trustee doesn’t have to be a last resort. Consultations are free and do not impact consumers’ credit, which makes it a great first step when there are signs of financial distress. The earlier an individual reaches out, the more debt relief options that will be available to them to get their finances back on track.”

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-second wave, the Index has increased two points since last quarter to 92 points, although still 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 September 6 and September 13, 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.

National data is available upon request.