Interest rates, inflation worries not deflating

Manitobans are heading into the new year expecting financial challenges.

The latest MNP Consumer Debt Index, released Monday, shows 50 per cent of Manitoba and Saskatchewan residents are within $200 of not being able to pay their bills each month, up seven points from September.

Seven in 10 residents expect the cost of living to get worse and more than half believe the economy overall will worsen this year, according to the survey, which Ipsos conducted on behalf of MNP Ltd. between Nov. 28 and Dec. 1.

Manitoba and Saskatchewan residents also anticipate rising pressure from interest rates and inflation (53 per cent), unemployment and the job market (46 per cent) and Canada’s relationship with the United States (55 per cent).

Brad Milne, a licensed insolvency trustee at MNP’s Brandon office, said the survey results are consistent with what he sees on a day-to-day basis.

“One of the things that we tracked here is the cause of financial difficulty for people and for a long time, it would typically be unexpected life events like marital breakup or some kind of unforeseen health problems,” Milne said. “But today, a lot of people cite the cause of their financial difficulty is high interest rates and inflation.”

Manitoba and Saskatchewan residents believe everyday financial pressures will intensify, with three in five anticipating higher taxes — more than the other provinces. Additionally, around half expect transportation and health-care costs to worsen.

Although the Bank of Canada most recently held its key rate at 2.25 per cent, interest rates remain a source of stress for Manitoba and Saskatchewan residents, the survey found. Nearly two in three (62 per cent, unchanged from September) say they urgently need interest rates to come down. Nearly half (47 per cent) remain concerned about their ability to repay debt, increasing nine points since last quarter.

The number of residents who fear that a future increase in rates could push them toward bankruptcy jumped 18 points to 47 per cent — the largest increase among all of the provinces.

As these pressures intensify, the survey found more than half of Manitoba and Saskatchewan residents are adopting a “fight” mentality, taking proactive steps such as adjusting budgets, attempting to consolidate debt or seeking advice from a financial professional.

Meanwhile, one-third of Manitoba and Saskatchewan residents are taking a “flight” response, including avoiding thinking about financial responsibilities, avoiding financial discussions with family or professionals, or relying on credit to cover essential expenses.

Fifteen per cent of respondents said they feel financially frozen, unsure where to begin with facing financial stress.

“Obviously, ‘fight’ is the better mentality,” Milne said. “If you’re in a ‘flight’ situation, you’re just putting yourself at a greater risk of having to maybe consider a bankruptcy or (consumer) proposal down the road.”

Federal data from 2024 shows 3,781 consumers in Manitoba filed insolvencies under the Bankruptcy and Insolvency Act, a 4.4 per cent increase from 2023.

Of the insolvencies filed, 879 were bankruptcies and 2,902 were consumer proposals (a formal agreement between a consumer and their creditors to settle debts without filing for bankruptcy).

Manitobans who are dealing with financial stress have options for professional support, Milne said. People can contact a licensed insolvency trustee, which is a profession regulated by the federal government. They can also get in touch with the Credit Counselling Society to take advantage of free consumer debt and credit counselling services.

The sooner people look for help, the better, said Mark Kalinowski, corporate and community relations manager at the Credit Counselling Society, adding people can also talk to their bank.

“When you feel most like you can’t talk about something is probably when you need to,” said Kalinowski, who is based in Calgary.

“Everyone’s got money problems. It’s really, really hard out there — the (MNP) survey points to that. It’s OK to ask for help.”

The MNP Consumer Debt Index found while the average amount Manitoba and Saskatchewan residents have left after monthly expenses has risen by $35 since September to $785, this was the smallest increase among all of the provinces.

Significantly fewer Manitoba and Saskatchewan residents (49 per cent) report having six months of emergency savings, dropping 10 points this quarter, the survey found.

aaron.epp@freepress.mb.ca