Inflation may bite into Manitobans' pent-up festive spirit ahead of holiday spending
Even rising cost of day-to-day life might not be enough to dampen spending this winter, says economist
Groceries. A new house. Renovations. Gas. The holiday season.
It's all piling up for the Roehl family.
"We normally get the kids lots of gifts or whatever they have on their wish list, but it's only going to be a couple things each now," said Donovan Roehl, who lives in Brandon, Man., with his wife and three children.
"It's just bills, bills and bills."
The Roehl family is among many Manitobans who are trying to balance the excitement of winter holidays with the highest inflation rate since 2003.
Statistics Canada reports the national inflation rate hit 4.7 per cent last month. That means along with rising day-to-day costs, upcoming spending on Black Friday, Cyber Monday and general holiday sales will add up — while wage increases haven't kept pace with inflation.
But last year's holiday pandemic restrictions, which limited gatherings and the sale of non-essential items, could have shoppers eager to spend.
"After two years of being kind of cooped up, I think that everyone, including me, wants to go out and celebrate a little bit," said Shiu-Yik Au, an assistant professor of accounting and finance at the University of Manitoba's Asper School of Business.
At the same time, Au suggests saving should be a priority right now.
The high inflation rate after almost two years of global financial uncertainty is splitting economists, he said. Some believe the inflation spike is temporary, while others think it's a sign of what's to come — a constant rise.
"If you're an economist or a high-level investment manager, this is a turbulent and scary time because we literally haven't seen anything like this in 100 years," said Au.
"They're getting ready for anything that could happen … and I hope that every Manitoban is also doing the same."
Precarious position for middle class
Winnipeg business owner Meron Gebrit is among those feeling the financial crunch.
She's trying to balance her budget with a desire to celebrate Christmas in a big way this year.
"Even the gatherings — you want to get together, but you have to be careful. And the costs are going up exponentially, so that makes a big difference," said Gebrit, who owns Specs Appeal Optical, an optometry store.
Statistics Canada reports between October 2020 and October 2021, the cost of meat rose by 10.1 per cent in Manitoba, while natural gas was up 31.1 per cent and gasoline by 39.2 per cent.
"For a family of four, it's crazy to go to the grocery store, spend $700 and you're only getting two shopping carts of food," said Gebrit.
"For people who are low-income and don't have disposable income … how do we expect people to make it?"
That isn't an easy question to answer, said Au. Many who were already well-off made more money during the pandemic, while there were federal support programs for low-income people and those who lost their jobs.
But those in the middle "lost out," says Au. "[You] didn't make any money on the stock market, so you kind of got squeezed."
Inflation will "play horribly" for the lower and middle classes, says Au.
"If prices are going up and you're rich, whatever — big deal."
But for those who were out of work during the pandemic and had to stretch every dollar, it's a bigger problem.
"Suddenly, just when you're getting back into the workforce — just when you think you're going to get a little bit of a pay raise — all of a sudden your dollar doesn't go as far."
WATCH | Spending tips for the winter holiday season:
Holiday shopping patterns may shift
In a survey conducted by NielsenIQ for Chartered Professional Accountants Canada, almost 60 per cent of respondents said COVID-19 isn't making a difference in how much they plan to spend over the holidays.
About 17 per cent of respondents to the survey, conducted online from Sept. 22 to Oct. 12, said they'll spend more, while 22 per cent said they'll spend less.
The survey also found 34 per cent of respondents said COVID-19 actually made it easier to save for the holidays, while 30 per cent said the pandemic made it harder to do so.
A margin of error cannot be calculated for online surveys, but for comparison purposes, a random sample of the same size would yield a margin of error of plus or minus two per cent, 19 times out of 20.
Devanshi Patel sees how hard it is for Manitobans to save while paying for basic needs.
"A lot of customers, they can't even afford basic needs like bread," said Patel, whose family owns Morris Super Variety, a grocery and liquor store in Morris, about 50 kilometres south of Winnipeg.
"We always look after them. Customers always complain that food is expensive, but what can we do? We always get it at the increased price."
Patel said some people in her life pulled back on recent Diwali celebrations due to COVID-19 restrictions and the rising cost of food. She expects people will do the same with upcoming winter holidays.
Patel said she started investing in stocks and mutual funds during the pandemic to make extra money, but sees how inflation is affecting her customers, family and friends.
"Rising costs in general concerns me," she said. "We're not making the same amount of money that we're spending."