Confidence Rebounds in July

The Index of Consumer Confidence rose 5.5 points in July after dropping sharply the previous month.

Insights

Despite a promising moderation in inflation, the rising cost of living remains a concerning factor. The June Consumer Price Index (CPI) release, indicating an inflation rate of 2.8 per cent, showcased progress towards the Bank of Canada’s inflation goals and its efforts to control it. Nevertheless, consumers continue to be troubled by the cost of living, with a Q2 survey of consumer expectations by the Bank revealing that 48 per cent of respondents found it to be their primary concern. The increasing prices of essentials, particularly groceries, have contributed to this apprehension. Last quarter, every month had increases in grocery prices close to 10 per cent year-over-year. Additionally, the recent 25-point hike in interest rates adds further financial pressure on homeowners through increased mortgage costs. If the elevated cost of living persists, consumer confidence may experience a decline due to heightened financial burdens.

Consumers in British Columbia have responded positively to affordability measures implemented by the government. Initiatives such as enhancing and expanding the climate action tax credit and increasing BC Family Benefits have resonated with the public. During July, more than two million individuals and families received their first quarterly payment from the province’s enhanced climate action tax credit. Moreover, starting from July 20, families with children will benefit from an additional annual allowance of up to $750. These improvements align with the positive trends observed in current and future financial and job outlooks among British Columbians. While reflecting a variety of factors, the improvements in the financial outlooks of British Columbians are, to a degree, likely also demonstrating the publics’ recognition of these enhancements. As awareness of these benefits spreads, outlooks are likely to experience further improvements.