Canadian consumers are planning to spend less money on holiday gifts this year as they continue to struggle financially with both high inflation and high interest rates.
A poll of Canadians’ holiday shopping plans by BMO (BMO) bank has found that 78% of consumers plan on buying fewer gifts this December.
An additional 40% of people polled said they plan to buy less expensive gifts for friends and family during the year-end holidays.
A survey of Canadian adults aged 18 and older also found that 29% feel less financially secure than they did a year ago.
Most respondents said they believe it will take an average of three months to pay back their holiday bills this year, while 24% said they are not confident they will be able to pay off their bills on time.
While Canada’s inflation rate has declined to an annualized 3.8%, it remains well above the Bank of Canada’s 2% target.
To help lower inflation, the central bank has raised its trendsetting overnight interest rate to 5%, its highest level in more than 20 years.
Consequently, interest rates charged on credit cards, home mortgages, and other loans are at multi-year highs, impacting consumer spending.
BMO polled 2,502 adults over the age of 18. The survey has a credibility interval of +/- 2.2% 19 times out of 20.
