According to the latest EY survey, 53% of Canadians say rising costs are affecting their ability to purchase goods, with apparel, consumer electronics and beauty the categories most affected.

When it comes to affordability, the EY Future Consumer Index Survey reveals that 61% of consumers plan to save money for their future instead of splurging on non-essentials.

According to the surveys, consumers will continue to rein in their spend, trade down to cheaper alternatives and purchase fewer non-essentials. Some key items Canadian consumers are spending less on include clothing (40%), beauty and cosmetics (37%), and big-ticket items (34%), possibly reversing some of the recovery those categories have had so far this year.

Many consumers are also seeking private label alternatives for fresh food (58%) and packaged food (63%).

And while the rising cost of goods is primarily affecting lower-income earners, the survey also reveals all income earners are feeling the squeeze in some way.

This is reflected in large percentages of consumers across the income spectrum who have changed category purchases in response to inflation, with clothing, shoes and accessories, consumer electronics and beauty and cosmetics the most affected categories (see, below).

When it comes to booze, 52% of middle class consumers have changed their alcoholic beverage buying habits compared with only 27% of high income earners. Similarly, 62% of low income and 53% of middle class buyers have changed their packaged food spend in response to spiking prices, compared with only 31% of high income earners.

“The fabric of daily life has shifted in many ways — from where people travel and seek entertainment, to how they work and meet their needs,” says Lokesh Chaudhry, EY Canada consumer co-leader. “These significant shifts, coupled with inflation, are driving consumers at all income levels to change their shopping behaviours and rethink purchase decisions.”

According to Chaudhry, in order to be future-relevant and to drive loyalty, brands need to better understand the growing range of consumer needs, eliminate pain points and quickly respond with the right offering at the right price.

The report also notes that 37% of Canadians are prioritizing experiences over buying physical goods. And with two-thirds of Canadians preferring experiences at home, companies will need to identify and invest in emerging digital capabilities to be able to deliver the experience directly to the consumer. Also, customers who are willing to venture out are demanding more from physical stores, with a quarter planning to only visit stores that offer a great experience.