Canadians face 'lifestyle shrinkflation' as paychecks shrink: MNP data

Canadians are increasingly cutting back on non-essential spending as financial pressures mount, a trend MNP Ltd. is calling "lifestyle shrinkflation." Data from the MNP Consumer Debt Index shows that a significant portion of the population is already dedicating a large part of their income to bills and debt before their paycheque even lands.

According to polling by Ipsos for MNP, 61% of Canadians report that at least half of their income is committed to expenses before it arrives. A further 32% say most of their paycheque is already spoken for. The situation is more severe for 16% of Canadians, who state that all of their income is accounted for or that their expenses exceed their upcoming earnings.

“

Lifestyle shrinkflation is people just cutting back on not their necessities, but their luxury items, their wish list, their events, their travel, their holidays or their kids’ activities.

"Lifestyle shrinkflation is people just cutting back on not their necessities, but their luxury items, their wish list, their events, their travel, their holidays or their kids’ activities," explained Grant Bazian, president of MNP Ltd. This retrenchment impacts various aspects of life, with 37% of Canadians feeling that financial pressures are hindering their progress. More than a third are reducing spending on personal enrichment, including clothing, personal care, and children's activities.

“

Instead of heading to Europe, maybe you do a Canadian vacation. Or instead of doing a Canadian vacation, you do a staycation. You can see there are decisions that can keep allowing the consumer to shrink that cost.

Leisure and social activities are also being curtailed. Over half of respondents (57%) are cutting back on travel, 40% are scaling back on attending events like concerts and sports, and 56% are dining out less. Even social connections are affected, as 28% are reducing spending on gifts and celebrations, and 21% are hosting friends and family less frequently.

Stacy Yanchuk Oleksy, CEO of Money Mentors, suggests strategies for consumers to manage these pressures. She advises considering smaller-scale alternatives for vacations, such as a Canadian trip instead of international travel, or a staycation. Oleksy also recommends reviewing automatic payments for services like streaming, noting that companies often rely on consumer inertia. "They (streaming companies) bet on consumers being lazy," she said, highlighting the effort required to unsubscribe from unused services.

“

They (streaming companies) bet on consumers being lazy. If I’m subscribing, I have to physically go and unsubscribe myself. That’s a hassle. It takes time.