Rising costs and uncertainty leave Canadians cutting spending and delaying major financial moves, study reveals
Canadian households are grappling with ongoing economic turbulence, with many reporting that shifting conditions are making it increasingly difficult to stay financially on track.
The latest MNP Consumer Debt Index, conducted quarterly by Ipsos, shows that 61% of Canadians feel they are experiencing “financial whiplash” as changing economic conditions repeatedly disrupt their financial plans. At the same time, 74% say higher costs for essentials such as groceries and fuel are putting pressure on their budgets.
As a result, financial caution is becoming more widespread. Nearly three-quarters (73%) say they are reducing discretionary spending, while 84% report being more hesitant to take on additional debt.
The strain is also affecting how Canadians perceive their financial progress. About 64% say they are working harder financially without seeing improvement, and 69% say they are postponing major decisions due to ongoing uncertainty.
“Many Canadians are not just feeling financial pressure, they are navigating an environment that continues to shift, increasing uncertainty and making it more difficult to plan, budget, and stay ahead financially,” says Grant Bazian, president of MNP LTD. “Rising everyday costs and broader global uncertainty are outside of an individual’s control, creating a sense of ‘financial whiplash’. When conditions feel unpredictable, it becomes harder to absorb unexpected expenses or make confident financial decisions, whether that’s taking on new debt, making a large purchase, or planning for the future.”
Despite these pressures, the overall index remains unchanged at 87 points, suggesting Canadians are holding a cautious, wait-and-see stance. However, underlying indicators point to persistent strain. The net personal debt rating ticked up slightly to 18 points but still marks the lowest first-quarter reading on record.
Debt perceptions also show little movement. While 24% say their situation has improved over the past year and 19% say it has worsened, both figures are unchanged from the previous quarter—highlighting a sense of stagnation for many households. Concerns about employment are also rising, with 39% worried about potential job loss within their household.
Although the average amount left over at month-end has climbed to a record $1,000, up from $907 last quarter, the gains are uneven. A significant 43% remain within $200 of being unable to meet monthly obligations, while 29% say their income is insufficient to cover bills and debt payments altogether.
Interest rate uncertainty continues to weigh heavily. Even after the Bank of Canada held its key rate at 2.25%, 61% say rates still need to decline. More than half (53%) fear financial trouble if borrowing costs rise, and 42% worry higher rates could push them toward bankruptcy. Meanwhile, 45% say they would remain concerned about repaying debt even if rates fall.
“Even with rates holding steady for now, many Canadians remain uneasy about what comes next,” Bazian says. “With uncertainty around the path of interest rates later this year, households already managing tight budgets may have limited capacity to absorb higher borrowing costs or even sustain them at current levels.”
The pressure is also evident during tax season. Sixteen percent of Canadians expect to owe taxes they cannot afford to pay. Of those, 10% plan to delay payment, while 6% anticipate borrowing to meet their obligations. Another 11% expect to pay what they owe but will need to draw from savings.
Younger Canadians are particularly vulnerable, with 21% of those aged 18 to 34 saying they will be unable to cover their tax bill without taking additional steps, including borrowing.
