CONSUMER CONFIDENCE WANING

Published by Conference Board of Canada. Read full article here.

Key Insights

After dropping 11.7 points in May, the Index of Consumer Confidence fell a further 8.8 points in June to 79.4 (2014 = 100), the lowest level in more 18 months.

Consumers base their expectations of future inflation on their recent experience of actual price increases. Gas and food price increases strongly impact the consumer psyche. Gas stations are a frequent reminder of current prices, and food prices at the cashier remind consumers of their purchasing power. So, if both are still on the rise, it is difficult for consumers to feel confident about the current and future economic situation

The Federal government announcing $8.9 billion in financial support.

From the consumers’ perspective, boosts to certain benefit programs and the federal government's child care and dental care programs are more of a medium to a long-term solution, while inflation is a here-and-now problem. The average consumer cares about their next trip to the grocery store or gas station, not supplemental income that is due later. Therefore, fiscal spending should focus more on responding to current cost-of-living concerns and delivering targeted and temporary programs that shield vulnerable consumers financially.

Read the full article here.

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