The holiday season is approaching, and for many Canadians it won’t feel very merry in financial terms. Rising inflation, high interest rates, growing personal debt and ongoing worries about a possible recession have stretched household budgets. With prices up across the board and retailers already promoting gift guides while charities step up their appeals, many people are taking a hard look at their bank accounts and deciding to spend much more cautiously this year.
Retail forecasts reflect that caution. Deloitte Canada’s 2023 Holiday Retail Outlook found that surveyed Canadians plan to spend an average of $1,347 over the 2023 holiday season — down 11% from 2022’s predicted $1,520 and nearly 27% below the 2021 forecast of $1,841. The biggest cutbacks will be in charitable donations (down 40%), gifts (down 18%) and gift cards (down 14%).
Canadians are hunting for the best holiday deals—and will switch brands if needed
Value is taking precedence this season. Marty Weintraub, national retail leader at Deloitte Canada, says shoppers are shifting toward what the report calls “extreme value.” The top reasons Canadians choose a retailer are reasonable prices and strong value for money. As a result, many plan to do more shopping at mass merchandisers and warehouse membership clubs.
Key findings from the September survey include:
- One in three Canadians worry about how they will pay for gifts.
- Forty-eight percent intend to buy only what their family needs this season — up from 41% in 2022 and 35% in 2021.
- Seventy-six percent expect prices to be higher this year, and 73% believe retailers are raising prices unfairly.
- Seventy-seven percent will shop around for the best deals, and 71% will switch brands if their usual choice is too expensive.
- Forty-five percent are willing to visit multiple stores in the same area to find what they want; on average shoppers expect to visit about 16.5 stores and websites, a 37% increase from 2022.
- To accommodate holiday purchases, 24% will postpone travel and 23% will trim grocery spending.
What’s your deadline for holiday shopping this year? 🎁 💳 🛒🎀 — MoneySense
Despite belt-tightening, some Canadians plan to prioritize experiences and values. About 26% intend to treat themselves to experiences like concerts, sporting events, trips or spa days. More than half (55%), particularly younger adults and women, say they are willing to pay more for sustainable products and services. Travel spending is also expected to rise — the survey indicates an 11% increase in holiday travel spending compared with 2022.
Would you give a second-hand gift?
Thrifty shoppers are increasingly open to second-hand gifts. A trend report by Poshmark found that many Canadian consumers prefer receiving preloved items over fast-fashion presents, with 47% of respondents indicating they would rather receive a second-hand gift than a fast-fashion one.
Why travel spending is rising even as other budgets tighten
After pandemic disruptions, a degree of “revenge travel” remains. Weintraub notes that some people postponed trips during the worst of pandemic travel chaos and are now choosing to travel again despite higher costs. For many, the value of shared experiences outweighs buying more physical gifts. Weintraub says he plans to take his family on a holiday trip himself and will reallocate spending from other areas to cover the cost.
Rising debt, high interest rates and job concerns weigh on Canadians
Deloitte’s findings are consistent with other surveys showing growing financial stress. The MNP Consumer Debt Index reported that more Canadians are struggling with debt, higher borrowing costs and worries about job loss. Half of MNP respondents said they were $200 or less from being unable to meet their financial obligations.
Grant Bazian, MNP’s president, summarized the situation: rising debt costs, increasing living expenses and the potential for further interest-rate and price increases have left many households precariously close to running out of money.
Similarly, the BMO Real Financial Progress Index found that half of Canadians feel anxious about holiday spending. Four in five shoppers plan to buy fewer gifts this year; almost half intend to spend less money overall on gifts. Gayle Ramsay, BMO’s head of everyday banking, recommends planning early, using digital budgeting tools and seeking expert advice to reduce financial anxiety and stay on track with long-term goals.
Budgeting tips and practical next steps
Higher interest rates do have a silver lining for savers: you can earn more on cash saved in a high-interest savings account (HISA) or on a guaranteed investment certificate (GIC). Current GIC rates can be attractive for short- and medium-term saving goals.
To regain control of holiday spending and overall finances, consider these practical actions:
- Create a clear monthly budget and track spending against it so you can prioritize what truly matters this season.
- Calculate your debt-to-income ratio to understand how much of your income goes to servicing debt, and plan to reduce high-interest balances first.
- Use online calculators to estimate mortgage payments and household costs when making larger decisions.
- Take advantage of free personal finance and investing courses to build money management skills.
- Consult a qualified financial planner or credit counsellor for tailored advice if debt or cash flow are concerns.
- Adopt money-saving habits and tools — set budgets, use alerts and compare prices before buying to ensure you’re getting the best value.
More about budgeting:
- Budgeting for a less stressful holiday season
- Want to save money on gifts? Embrace holiday sales, and start early
- The gift of not giving
- Travel hacks to help you save money on your next trip