The high cost of living is dampening the holiday joy for many Canadians as they plan to cut spending on gifts and travel over the winter break, polling shows.
Nearly 80 per cent of Canadians said in an Ipsos poll conducted exclusively for Global News that inflation and rising interest rates have had a “significant” impact on their holiday budgets.
A similar majority (77 per cent) also said they don’t plan on travelling over the holiday period, with more than half of the respondents saying this was because of inflation, according to the Ipsos poll published Wednesday.
The survey comes amid growing concerns about the impacts of interest rate hikes this year as well as a “softening” labour market in Canada as shown in the country’s latest job report released last week.
Canada’s overall inflation rate dipped to 3.8 per cent nationally in September, according to Statistics Canada, offering some relief for consumers.
While prices at the grocery stores cooled from the 6.9 per cent rise in August, they still rose at a rate of 5.8 per cent in September.
So Canadians are still feeling the “affordability crunch” and that is affecting how they plan to spend the holidays with their loved ones this year, said Sean Simpson, senior vice president with Ipsos Public Affairs, in an interview with Global News.
“Housing prices are higher, food prices are higher, all outpacing inflation and so there’s just less money left over at the end of the year to give gifts because people have been able to save less and they’re spending more on the things that they need and less on the things they want,” he said.
While three in 10 Canadians (29 per cent) said they intend to spend less on gifts this coming holiday season than they did last year, roughly half (49 per cent) said they’ll spend about the same, the poll found.
“Prices are going up, shrinkflation is a reality and so if people intend to spend less or even the same, what that likely means is that they’re going to be giving fewer gifts because those gifts are costing more,” Simpson said.
A Deloitte Canada survey published last month showed that the average amount Canadians are planning to spend over the holidays this year has reached a five-year low of $1,347.
Ahead of the holiday shopping rush, half of the Canadians are concerned they might not be able to afford holiday traditions or to buy gifts for their loved ones, according to the Ipsos poll.
Despite the intention not to splurge, 48 per cent are also worried they might “get in over their heads” with holiday spending due to the high prices, Simpson said.
Younger Canadians and parents were more likely to express feeling the holiday pinch and say that their budget has been impacted by inflation, he said.
Inflation also hitting Canadians' travel plans
Inflation is not just affecting gift-giving this year. Many Canadians are also reconsidering their travel plans.
While one in four (23 per cent) Canadians say they plan on going away somewhere this winter, 50 per cent of that group said they are spending less on holiday travel this year.
Still, despite the high airfares and hotel prices on top of the cost of living concerns, there is a pent-up demand to get away, according to Martin Firestone, president of Travel Secure Inc., who said he’s seeing a “tremendous uptick” in travel bookings for the fall, winter and Christmas.
“I am still seeing what we call revenge travel, like people who haven’t travelled in years that are still finding a way to travel …. albeit against renewed mortgages,” he told Global News in an interview.
A survey by Sunwing published last month suggested almost half of those planning a trip to a sunny destination in the coming months say value for money is their top consideration when booking a trip, followed by the safety of the destination.
The increased cost is also forcing 51 per cent to travel somewhere different than they normally would this year, the Ipsos poll showed.
Two-thirds (65 per cent) of Canadians said they can’t afford both their holiday spending budget and travel.
Firestone said Canadians can cut back on travel spending by looking for the best deals, shortening their trips or booking fewer rooms.
“There is a multitude of things you can do, but nothing is going to get you back to the days when there was very inexpensive travel around,” he said.
“It’s costing more than ever now.”
— with files from Global News’ Nivrita Ganguly and Craig Lord
These are some of the findings of an Ipsos poll conducted between Oct. 20 and 23, 2023, on behalf of Global News. For this survey, a sample of 1,000 Canadians aged 18+ was interviewed. Quotas and weighting were employed to ensure that the sample’s composition reflects that of the Canadian population according to census parameters. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ± 3.5 percentage points, 19 times out of 20, had all Canadians aged 18+ 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.