A story on the Globe website caught my eye this week because it may signal the beginning of a consumer backlash against soaring living costs.
The movie theatre chain Cineplex CGX-T announced a $1.50 booking fee for ticket purchases made online and through its mobile app. This goes against all the rules of online economics, which is that you get a price break for not taking up a company’s time and space. But the response to the Cineplex price hike suggests a broader anger. People are fed up with rising prices.
Our story about Cineplex was one of the most widely read on our website that day, and it generated a lot of comments. There was also a lively discussion about the announcement on the Personal Finance Canada thread of the online forum Reddit. I did not see much acknowledgment that Cineplex theatres were closed during pandemic lockdowns, and that COVID has hit few sectors harder. Instead, people sniped at the price increase from all directions.
Grouchy comments online are standard these days. But the Cineplex price increase seemed to punch above its weight in engaging readers. Isn’t the biggest expense in movie-going related to the gross size and cost of snacks?
Statistics Canada said this week that the cost of living in May jumped 7.7 per cent, the highest year-over-year rate since the legendary inflation days of the early 1980s. We are hip deep in a wave of price increase driven partly by weak supply lines and partly by raging demand from households that stockpiled cash in the pandemic and are eager to spend on certain goods and experiences like travel.
One of the things we need to see for inflation to cool down is less consumer willingness to pay today’s high and rising prices. The latest Consumer Spending Tracker from RBC Economics said we’re still buying more than we did before the pandemic, but there are signs that spending is plateauing.
A loss of momentum in spending could be described as inflation exhaustion, but there’s a backlash element as well. Businesses seen to be part of the inflation problem could be punished, a point that was made by Abacus Data CEO David Coletto in a tweet this week in reference to young adults. “If you’re under 40, inflation is an entirely new phenomenon…Every sector, brand, and org needs to understand this.”
Companies like Cineplex are in a bind – they may have suffered during the pandemic, or they may face rising input costs. Costs must to some extent be passed along to customers, who have so far been willing to pay up. The inevitable backlash may have started this week.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
How to build an emergency fund if you’re in debt
Practical ideas on how to build a financial buffer, even if you’re carrying some debt. The must-have financial accessory of the second half of 2022 is the Plan B fund for emergencies.
Protecting retirees from inflation
A look at how financial planners and investment advisers are managing the portfolios of retired clients to blunt the impact of inflation.
Fight inflation by delaying your CPP
An investment adviser on how delaying the start of Canada Pension Plan retirement benefits until age 70 can help you deal with inflation. Delaying benefits is also a powerful way to help ensure you don’t outlive your retirement savings.
Can you get life insurance if you had COVID?
Yes, but there will likely be a waiting period after your bout of COVID is resolved.
Ask Rob
Q: The market value of my RRSP portfolio of mutual funds has been decreasing for the last few months due to market fluctuations. If I were to move to another RRSP product, I would certainly take a loss. Do you recommend just staying the course and hoping that market rebounds to a more positive outlook?
A: The real question is how your funds have done over the past three to five years, including the stock market crash of March 2020 and the huge subsequent rebound. Jumping in and out of funds based on short term results is a good way to lock in losses and miss out on gains to come. By the way, even portfolios following the classic rules of diversification have been hit hard this year. You are far from alone in seeing declines in your RRSP.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
A publication for advisers tackles the question of whether assets held in registered retirement savings plans are protected if you go bankrupt.
The Money-Free Zone
River Man by the jazz singer Andy Bey is a hypnotic version of a song by folkie Nick Drake. Also covered, in nice form, by a German alternative band called Science Fiction.
Tweet of the week
A financial planner throws out the question of what you’d do if you had $10,000 to invest right now.
In case you missed these Globe and Mail personal finance-related stories
– A cottage succession story to learn from
– How to sell the family cottage without upsetting the kids
– Teaching children about the reality of being frugal
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Is the middle class dead for millennials and Gen Z? • Gas prices are soaring. Are electric vehicles an affordable solution? • Crypto is booming, but should you invest? • How are young Canadians dealing with soaring rents? • Inflation is squeezing our finances. What can we do about it? • Is a hot housing market squeezing Canadians out of their small towns?
- ✔️ The housing file: How bad is housing affordability? Even a crash won't help • Sell the family home to lock in profit and then rent? Better not • Why young adults can't afford houses: Hard work got you more in the past than it does now • Five reasons you should not buy a house till you're at least 30 • Now more than ever, owning a house is not a retirement plan
- 📈 Investing: The 2022 ETF buyer's guide: Best Canadian equity funds • The 2022 Globe and Mail digital broker ranking: Does the zero-commission revolution flip the script on who's best? • With bonds sinking, conservative investors are waking up to risks they never saw coming • A five-step plan for dealing with the sad fact that almost every investment is falling lately • The best financial advice in advance of retirement? Work on your marriage • One-year GICs are the best deal in town for safety seekers • What to do if the financial plan you paid thousands for disappoints
- 💰 Your money: Are you prepared for the pandemic wealth boom to blow up in our faces? • This hard-working 24-year-old is nailing it financially. But where's the happiness? • Who should and shouldn't worry about the wave of rate increases this year, and what every stressed-out borrower should do right now • Don't make this potentially costly assumption about the CPP Survivor's pension
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
