Inflation: Canadian parents are feeling the pressure

Carlyne St Jules may have to cut her family vacation short this year, thanks to rising inflation.

“Everything here is $300 and up,” she says of hotel rooms in Montreal, where she has family and previously studied dance.

“To fill my tank… to come here it was like $89. I have a little four-door Kia.”

St Jules, a 29-year-old events coordinator who now lives in New York City with her three children, ages two, seven and 10, says she “brought them here so they could see my old grounds, but I don’t know how much.” I’ll be trampling here with these prices.”

From skyrocketing grocery bills to more expensive extracurricular activities, parents are facing cost-of-living increases that have them worried about opportunities for their children and a stable financial future for their family.

Inflation hit a 39-year high in June amid an economy hampered by COVID-19, labor shortages, supply chain challenges and the looming threat of a recession.

Money is tight these days on everything from diapers to daycare to family outings, and the holidays are harder on the wallet as the cost of filling up gas and prices for travel accommodations rise.

Young parents are not used to such rapid price increases; many had not yet been born when inflation last reached this rate in 1983.

Mortgage and rent, along with car loans, take some of the biggest bites out of parents’ income, said Scott Hannah, executive director of the Credit Counseling Society.

For drivers, prices at the pump have risen even faster: Gas prices in June, the most recent month available, were 54.6 times higher than the same month in 2021, Statistics data shows. Canada, the biggest driver of inflation in that period.

Those financial drains “are really hurting a lot of Canadians right now,” he said. Meanwhile, appetites grow, clothes need to be changed, and sports, classes, and extracurricular activities increase. “If you have a young family, it’s the most expensive part of your years.

“I’ll be 65 next February, that’s hard to say, and as a kid it wasn’t that important if you didn’t have the latest and greatest right now,” Hannah said of the pressure of consumer trends.

For Montreal residents Nabil and Samia Haliche, higher grocery bills and tolls at pumps have pushed them to seek more for food sales.

“We see it clearly in the grocery store,” Samia said, after she and her husband left a Montreal secondhand clothing store with their two daughters, ages 2 and 10.

“Everything is more expensive than usual.”

Families with young children often have one parent on parental leave, out of work, or working part-time, adding to the financial strain.

House prices and rents have also skyrocketed during the pandemic. The national home price index, which adjusts for price volatility, hit a high of $835,000 in March, capping a 52% rise in two years, according to the Canadian Real Estate Association. Prices soared higher in a frenzied shopping spree that saw families stretch budgets to hit the market or upgrade to roomier digs amid the COVID-19 lockdown and lower rates.

The median Canadian rent increased 9.5 per cent in June from a year earlier, though it remained 3.5 per cent below June 2019, according to Rentals.ca, an apartment search website.

“A lot of young families in the last two years have taken this opportunity, #1, to start their family, and #2, to get into that first home,” said Leah Zlatkin, mortgage expert at LowestRates.ca.

Many pushed their budgets to the limit to make down payments and monthly interest, which quickly began to rise when the Bank of Canada began raising its key interest rate.

“For those people, when you see a variable rate increase, it might be a bit of a shock,” Zlatkin said.

For concerned homeowners, Zlatkin suggested sitting down with a mortgage broker to discuss refinancing. If payments seem out of reach at the moment, he said customers should immediately notify their mortgage provider, who may offer a deferment program or a temporary interest-only payment plan.

A clear look at what can be cut from the budget, or replaced with less expensive options, is also required.

“Late at night while you’re bottle-feeding or breastfeeding, flick through the Flipp app and find some deals and do a price adjustment when you’re at the grocery store.”

Hannah suggests buying in bulk (small families can team up with larger ones), redeeming loyalty points, and swapping out familiar brands for generics. Even a slightly awkward conversation with family members to reduce holiday gift expectations can be smart.

“No one wants to receive a gift from someone who can’t afford it,” he said.

This report from The Canadian Press was first published on August 3, 2022.

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