Majority of Canadians plan to spend less this holiday season, survey shows

A recent survey found that a majority of Canadians plan to drastically cut back on spending this holiday season.

According to the latest Bank of Montreal (BMO) Real Financial Progress Index, 79 per cent of Canadians polled indicated they would limit how they spend, with 54 per cent saying thinking about holiday spending causes financial anxiety. Thirty per cent suggested they are not confident they can afford every item on their holiday shopping list.

The results showed that, on average, Canadians plan on spending more than $1,991 this holiday season, including travel ($1,802), holiday gifts ($519), entertaining ($295), decorations ($141) and other holiday expenses ($275).

Nearly a quarter (23 per cent) plan on spending more than $2,000 during the holidays.

“While affordability and cost of living concerns will be top of mind for many this holiday season, Canadians are still finding ways to celebrate the season by reevaluating their priorities and adapting their spending habits,” said Gayle Ramsay, Head of Everyday Banking Segment and Customer Growth at BMO.

The BMO Real Financial Progress Index also found that while 69 per cent of Canadians are confident in their financial situation, only 53 per cent believe they are making real financial progress. One quarter (25 per cent) feel less financially secure than a year ago.

Ipsos conducted the poll in Canada from Sept. 2 to Sept. 14, 2024. A sample of 3,400 adults ages 18 and older was collected.

“Faced with higher living costs and a rising unemployment rate, it’s no surprise that many Canadians are planning to scale back their holiday spending plans this year,” said Sal Guatieri, Senior Economist at BMO.

“Thankfully, the Bank of Canada is also concerned about the weak economy and possibly undershooting its inflation target. It will likely continue to reduce interest rates through next summer. This should add some cheer to the 2025 holiday shopping season.”

On Wednesday, the Bank of Canada claimed victory against high inflation by delivering a massive interest rate cut and signalling that its policy rate will likely continue falling in the coming months. The half-percentage point interest rate cut marks the fourth consecutive reduction since June, bringing the central bank’s policy interest rate down to 3.75 per cent.

Canada’s inflation rate fell to 1.6 per cent in September, solidifying forecasters’ expectations for a more significant rate cut.