Canadians more frugal due to rising food prices: RBC Canadian Consumer Outlook
Economic mood darkening, with first decrease in the national index in nearly two years
TORONTO, May 16, 2013 /CNW/ - Most (84 per cent) Canadians believe the food they typically purchase has increased in price over the past year, according to the quarterly RBC Canadian Consumer Outlook Index (RBC CCO). With rising food prices eating into their household budgets, an overwhelming majority of Canadians (91 per cent) say they will tighten their belts and make smarter decisions when purchasing food.
The survey found that the average Canadian spends $411 per month on groceries and one third (33 per cent) say rising food prices has had a significant impact on their budget, with 43 per cent cutting back on other expenses. Also, increases in food prices are impacting shopping habits with more than half of Canadians (57 per cent) comparison shopping for food more than before, and following a budget more than before and buying less on impulse (41 per cent); others are looking to other parts of their life to deal with rising food prices such as using their vehicle less (15 per cent).
"In light of concerns over escalating food prices, more Canadians are looking for cost-saving strategies they can use on their next trip to the grocery store," said Jason Round, head, Financial Planning Support, RBC Financial Planning. "Creating a budget that covers all of your expenses - including must-haves such as groceries - can help keep your spending under control. Since costs can change, it's essential to regularly review your budget to stay on track and make any adjustments necessary to help balance living for today and saving for future goals."
Food inflation rose 2.4 per cent last year, after increases of 3.8 per cent and 1.4 per cent in 2011 and 2010, respectively. A 2012 RBC Economics report anticipated that last year's U.S. drought could send food prices back up between 3.0 and 4.0 per cent this year. The report also noted that it takes approximately six months for raw food commodity price changes to pass through to prices at the retail level.
"Even though we are seeing rising food costs, overall inflation should remain below two per cent in 2013," said Paul Ferley, assistant chief economist, RBC. "We are in an environment of modest growth, so pressures from rising food prices won't dominate inflationary expectations."
The RBC CCO indicates that economic mood in Canada has darkened over the last quarter, with the national overall index dropping six points to rest at 82 - the first time in nearly two years that there has been an overall decrease in the national index. Only six-in-ten (60 per cent) Canadians think the economy is in good shape (down a significant eight points since last quarter). More Canadians believe the economy will worsen in the next year (30 per cent) rather than improve (26 per cent).
According to the Index, while general perceptions of the economy have worsened, job anxiety has actually dropped, returning to more modest levels of 19 per cent after a temporary spike to 24 per cent earlier this year.
RBC Economics is currently forecasting the Canadian economy will grow by 1.8 per cent in 2013, and will be releasing its next Economic and Financial Market Outlook in June.
RBC CCO REGIONAL HIGHLIGHTS
|Have increased the past year||84%||86%||88%||89%||80%||86%||88%|
|Have had a significant impact on day-to-day budget||33%||32%||24%||37%||33%||38%||36%|
|Comparison shop more than before||57%||52%||53%||52%||58%||60%||59%|
|More budget conscious/less impulse buy||41%||45%||37%||40%||41%||40%||47%|
|Average monthly spend||$411||$415||$440||$401||$379||$448||$420|
Expect personal financial situation to improve in the
Expect Canadian economy to improve in the
|Anxious about potential job loss in the next year||19%||17%||13%||13%||24%||13%||22%|
About RBC financial advice and interactive tools
Canadians can access RBC Financial Planning and rbc.com/savingsspot for free planning, budgeting and savings advice and resources, or to find the nearest Investment and Retirement Planner. In addition, Canadians who want to get more from their day-to-day banking, protect what's important, save and invest, borrow with confidence or take care of their businesses, the RBC Advice Centre can help answer their questions. Interactive tools and calculators such as the Debt Reduction Plan and Debt Consolidation Calculator, provide customized information covering many facets of personal finance. All personal RBC online banking clients also can use myFinanceTracker, a no-cost interactive financial management tool, to create a set budget, track their spending habits and access tax-related apps in myTax Centre, to help manage and plan their taxes.
About the RBC Canadian Consumer Outlook Index (RBC CCO)
Benchmarked as of November 2009 to a baseline of 100, the RBC CCO is conducted online via Ipsos Reid's national I-Say Consumer Panel to 3,024 Canadians (560 British Columbia, 407 Alberta, 291 Saskatchewan/Manitoba, 866 Ontario, 579 Quebec, 321 Atlantic Canada). Weighting was then employed to balance demographics and 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. Data collection was April 2 to 15, 2013. The precision of Ipsos Reid polls are calculated using a credibility interval. In this case, the poll is considered accurate within ± 2 percentage points of all Canadians.