“So, as an advisor, it really comes down to helping them think about this and plan, and really installing a level of financial resilience in your clients so they can deal with this as it continues.”
Statistics Canada yesterday announced that Canada’s annual inflation rate held steady in October, rising 6.9% since last October, which matched the September increase. Faster price growth for gas and mortgage interest costs were moderated by slowing price growth for food. But, as McQueen noted, that still indicated costs were rising, not falling, and the higher new prices have embedded.
“Inflation will end eventually, but right now there is still inflation in the system. Some job numbers have been quite good. You’re seeing wages rise, but not quite as fast as inflation. I think the Bank of Canada will likely raise rates to slow the economy. So, you’re probably looking at either a 25 or 50 basis point hike in December, which just makes things more expensive,” he said.
McQueen said advisors can help clients by having individual conversations with them since each person’s situation is different. If they owe money, which many Canadians do, and are carrying it on a variable rate or line of credit versus a fixed rate mortgage, they could try to pay it down faster. If they have discretionary costs, such as streaming, music, or movie services or gym memberships, they can pare what they’re not getting value from.
They should also ensure they have an emergency fund – cash, not a line of credit – and shore that up, especially if there’s any danger there may lose their jobs or face a work slowdown.
