A new survey showed that Canadians feel less optimistic about their financial situations, as participants express concerns about inflation, income levels, and the potential recession in the middle of the year.

The Canadian Consumer Pulse Study conducted by TransUnion for the second quarter of 2024 found that 57 percent of Canadian households said their income does not keep pace with the current inflation rate, while 38 percent expect an increase in bill and loan payments over the next three months.

This has led to shifts in saving patterns, with some participants indicating that they are saving more in their emergency fund, increasing their use of available credit, or adjusting their retirement savings plans.

Meanwhile, 46% of Canadians indicated that their household financial resources are worse than planned so far this year, an increase of four percentage points from last year, according to the survey that included 1,000 adult Canadian consumers conducted from May 1 to 10. This is despite nearly four in five reporting that their income remained stable or increased in the past three months.

Matthew Fabian, director of research and financial services consulting at TransUnion, said, "I would say it has deteriorated a bit compared to the last two quarters."

"With the continued rise in living costs and higher interest rates, this has eroded some of their disposable income over time, and I think it is starting to affect them."

Other findings from the survey indicated that 58 percent of participants reported being pessimistic about the state of their household financial resources over the next 12 months, and nearly two-thirds indicated that they feel Canada is currently in a recession or will enter a recession before the end of this year.

About 86 percent said that inflation is among the top three financial concerns for households over the next six months – the highest percentage since TransUnion began tracking quarterly in 2022.

Last month, Statistics Canada reported that the annual inflation rate unexpectedly rose in May to 2.9 percent, up from 2.7 percent in April.

This included a 5.6 percent rise in gasoline prices compared to last year and a 1.5 percent increase in grocery prices year-over-year.

Fabian noted that despite the decrease in inflation over the past year, the rising cost of necessities like groceries, gasoline, and utilities remains "disturbing" for many consumers.

Statistics Canada reported last month that grocery price inflation has slowed significantly in recent months, but food prices are 22.5 percent higher than they were four years ago.

Fabian added, "The high cost of these non-discretionary items creates a bit more shock at the checkout because it forces these consumers to make trade-off choices regarding where their income is directed."

"Will they pay for these things, or will they pay off debt? That creates more stress."

About 27 percent of Canadians plan to apply for new credit or refinance existing credit in the next year, an increase of four percentage points from the previous quarter, according to the study.