Inflation is by far a bigger pain point for Canadians than interest rates. And people aren’t sure we are out of the woods yet.

Inflation hurts more

When asked which is causing them more hardship, 84% said inflation, compared to 16% who said it was interest rates. 

There are very few differences by age, education, region, gender, place on the political spectrum or voting intention. 

More than 80% of Liberal, NDP and Conservative voters all say inflation is a bigger challenge.

Those with household incomes less than $50,000 were 13 points more likely to cite inflation (89%) compared to those with incomes $100,000 or higher (76%).  Homeowners were 9 points more likely to cite interest rates compared to renters.  Retired people were more likely to cite inflation.

Many fear that the worst of inflation isn’t over

As inflation rates recently dropped to 3.1% we asked people if they thought this development meant that the worst was over or that inflation might rise again. 

The results show that fear is still very broad: only 18% said they felt the worst of inflation was over, compared to 82% who felt that the inflation rate might go higher again.  Answers to this question did show some relationship with politics – Liberal voters were twice as likely as Conservative voters to say the worst was over – but in both cases a majority were worried that wasn’t the case.

Interest rate fear may be moderating, but only so much

When asked if they believe the lower inflation rate will lead to a decline in interest rates, most people do not feel comfortable making that prediction.  The majority said they thought interest rates would hold at current levels, while 26% said they will likely rise further, and only 15% said they will likely come down.  On this question too, there is very little variation by age, region, income or other socio demographic variables.  Liberal voters were slightly more likely to feel that interest rates will begin to drop (23%).

Our takeaway

Bruce Anderson: “The mood about the cost of living remains grim and people are not confident that things are about to get better.

It’s worth noting that the way people feel about the economy is not a function of their political views, but the reverse is likely true: that political preferences are influenced by how stressed or fearful people are right now.

The next several months and the cost of goods and services, along with the direction of interest rates are likely to continue to be the surround-sound shaping politics in Canada.”