3 things you can expect to spend more money on in 2023

This article has been updated from a previous version.

It’s no secret that everything is more expensive these days. Canada’s inflation rate hit a more-than-40-year high in the summer of last year, sending consumer prices soaring. Despite signs that inflation may have reached its peak, its descent is nothing short of slow-moving. It currently sits at 6.8%, down from 6.9% after remaining stagnant since September, according to Statistics Canada. 

Ongoing supply chain issues and demand for everyday consumer goods linger from COVID-related shutdowns and setbacks in 2021. As a result, Canadians are feeling the strain of rising interest rates, insurance premiums, and food prices. 

These are just three things that Canadians can expect to spend more money on in 2023. Here’s what to expect, and how to save money in each department. 

1.  Mortgage costs 

The slow housing market drove prices to new lows in 2022, breaking records in several major cities across the country, including Toronto and Vancouver — two of the most expensive places to live in Canada. 

The Canadian Real Estate Association (CREA) predicts home prices will begin to rise slowly this year, increasing by only 0.2% from 2022. 

However, the historically high interest rates fuelling the real estate freeze are expected to lower at some point later in the year. Until then, rates may continue to deter some buyers, as Canadian homeowners with tight budgets risk becoming house poor. Homebuyers looking to lock in a lower mortgage rate should consider comparing mortgage rates before getting a pre-approval. Depending on the lender, mortgage pre-approvals typically last anywhere from 60 to 120 days, subject to conditions such as credit score and continued employment. 

Renters may also continue to face higher housing costs throughout the year. In Ontario, for instance, the government set the guideline on rent increases at 2.5% for 2023, up from 1.2% last year. This percentage is the maximum amount a landlord can raise a tenant’s rent in the given year without approval from the Landlord and Tenant Board, as long as they give at least 90 days written notice. As a result, landlords facing higher mortgage rates will take advantage of this opportunity in order to make up for the added expenses. This will affect both those who choose to rent and those who can’t afford to buy and rent instead, possibly for longer than planned.  

2.  Auto insurance 

Most auto insurance providers offered rebates in response to the pandemic, lowering premiums for those driving fewer kilometres and providing deferrals, among other relief measures. The Financial Services Regulatory Authority of Ontario (FSRA) estimates that Ontarians received or were eligible to receive nearly $1 billion in premium relief in response to the COVID-19 crisis. 

With the Canadian government removing all COVID-19 entry restrictions, quarantine guidelines, and mask mandates, the return of a regular daily routine got most drivers back on the road in 2022. This, coupled with a slew of recent rate approvals from FSRA, means, you’ll likely see an increase in your car insurance premium when your policy renews in 2023.  

Car insurance providers in Ontario have already started to re-rate policies for increased driving kilometres, among several other factors. And it’s the driver’s responsibility to inform their insurance company of any changes to their driving habits, such as an increase in annual kilometres driven. Omitting facts like this can void your policy. If you’re worried about increasing rates, compare auto insurance quotes to find your cheapest premium. 

Additional challenges in this area stem from foam (for seats, headrests, insulation, etc.) to microchips — automotive parts that have been in short supply. Not only can the specific parts continue to cost consumers more to acquire, but the wait time for repairs is expected to continue in 2023. Your insurance policy may provide a rental car; however, the bill for service will be bigger since the duration is longer than usual. These expenses can drive prices up across the industry and trickle back down to consumers. 

3.  Food 

Another essential — food — hasn’t escaped inflation, which means trips to the grocery store and restaurants will remain expensive. 

According to Canada’s Food Price Report, an annual forecast of overall food prices, the average family of four will pay $16,288.41 for food in 2023, an increase of more than $1,520 from the year before. Similar to 2022, the report projects food prices jumping by 5% to 7% this year — the highest increase in 12 years, consecutively. 

The report also anticipates restaurant menu prices increasing by 4% to 6% due to rising commercial rents, food prices, and labour market changes. 

Ways to save money on your mortgage, auto insurance, and food in 2023 

Often, the new year is a time for setting goals and resolutions. Unfortunately for many, it also comes with post-holiday bill shock. Make paying down your credit card balance your priority, then consider these money-saving hacks for 2023: 

• Compare insurance prices and mortgage rates: You might already shop around for clothing or popular items, like cellphones, but what about your personal financial products, like car and home insurance, or a mortgage? Comparison shopping is free, lets you see the lowest rates from various providers and lenders, and can help you find the best price for your needs. or a mortgage? Comparison shopping is free, lets you see the lowest rates from various providers and lenders, and can help you find the best price for your needs. 

• Lean into tech: There is an app for nearly any conceivable task these days, including alerting you to sales when prices drop. Get price alerts for the big-ticket items on your wish list to ensure you never miss a deal. 

• Make mindful purchases: Don’t enter the grocery store without a list, and make sure you stick to it. The same goes for online shopping — only put the items you need in your cart. 

• Do your research: Spending more money can sometimes save you money. If an item is of better quality, you may have it for longer and not have to purchase it as often. Research your purchases rather than making quick and often price-related decisions to avoid buyer’s remorse. 

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