The past year has been tough on the average Canadian’s wallet. And the start of 2023 isn’t necessarily providing much of a reprieve. After peaking at 8.1% in June last year, inflation is slowly easing, now resting at 6.3% as of December — still well above the Bank of Canada’s 2% target.
The rising cost of transportation has been a direct product of consistently high inflation. Higher gas prices, which rose 13.7% year-over-year in November have caused many Canadians to rethink how — and how often — they get around. According to a recent Leger survey conducted on behalf of BNN Bloomberg and RATESDOTCA, 48% of Canadians have made cost-efficient changes to their transportation choices as a response to inflation.
Not only have their daily transportation choices shifted, but Canadians’ willingness to commute to work and general attitudes toward employment have also been affected as a result.
Almost half of Canadians have made changes to transportation because of inflation
Cutting down on transportation costs is just one way Canadians are trying to manage higher living expenses. Of the 48% who plan to or have already made cost-saving changes to their transportation, 35% are trying to avoid unnecessary trips, while 6% say they’re putting off necessary vehicle repairs.
Though some of these lifestyle changes can be helpful, like lowering the amount of money spent on gas, safety should still be top of mind. Putting off vehicle repairs on crucial components like brakes, steering, tires, and transmission can be dangerous and lead to an accident, which could drive your premium up at renewal.
“Putting off vehicle repairs might not be the best decision,” says Daniel Ivans, RATESDOTCA auto insurance expert. “In the short-term, consumers who do this may be able to reprioritize those funds. However, the long-term implications of avoiding necessary car repairs can often lead to additional and unexpected expenses related to or caused by that very issue, or overall mechanical breakdown.”
Some (6%) even plan to or have already purchased an electric vehicle due to inflation, a solution that isn’t necessarily the most accessible for all Canadians.
“While electric vehicles can save Canadians hundreds of dollars a year at the pump, the upfront costs are more than many lower-income households are willing or able to bear,” says Ivans.
Nearly one-in-five Canadians plan to change their work commute due to inflation
Almost one-in-five respondents (18%) have changed or plan to change their work commute to spend less on travel.
High transportation costs have also affected Canadians’ employment preferences, with long commutes becoming somewhat of a dealbreaker in some cases. Of the 18% who are changing their work commute, 5% are asking employers for more remote workdays — a move more prevalent among younger Canadians under 35 (11%) versus those between the ages of 35 and 54 (5%). In fact, commuting less is so crucial for 4% of respondents that they plan to or already have changed jobs to accommodate this need because of inflation.
When finances are tight, it’s important to shift focus to what you can control. Much like choosing where, or what time of day you fill up your gas tank, the same choice is possible with your car insurance premium. You can — and should — compare car insurance rates from multiple providers to ensure you’re getting the most competitive rate.
Canadians turning to other transportation methods than driving
Out of the 11% of Canadians who have changed their main mode of transportation as a result of rising inflation, 7% switched from driving to walking, cycling, or public transit. However, of those who switched methods, the percentage that switched to walking or cycling (5%) is still higher than the percentage opting for public transit (3%). This could partially be due to inflation’s pressure on transit funding in some major cities, like the proposed 10-cent Toronto Transit Commission (TTC) fare increase (with reduced service hours).
Despite recent fluctuation, gas prices are expected to rise again to approximately $2/litre, making walking and cycling the most inexpensive solutions, particularly in urban areas. On top of that, many auto insurance companies are adjusting their premiums for inflation this year, which many Canadians will see reflected in their premium at renewal.
When looking to cut insurance costs, Canadians can decide which coverages may not be necessary in their current policy, if any. While this can be a good strategy, Ivans recommends only cutting what you can afford to lose.
“Sure, cutting costs by removing physical damage coverages from a policy for an older vehicle, or saving a few dollars a month by removing rental coverages might initially sound appealing,” says Ivans. “However, when the coverage is actually needed and not there to respond, the implications can be financially devastating for the average Canadian household.”
“If Canadians are keen to save money, they are advised to shop,” he says. “Consumers are not married to their insurance company. There are several policy options available to them, which offer coverages that are similar to or better than their current policy at a more budget-friendly rate.”
An online survey of 1,538 Canadians (out of which 1,512 provided a response about their main mode of transportation) was completed between January 13 and 15, 2023, using Leger’s online panel. No margin of error can be associated with a non-probability sample (i.e., a web panel in this case). For comparative purposes, though, a probability sample of 1,538 respondents would have a margin of error of ± 2.5 %, 19 times out of 20.
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