People shop for bargains at a retail store on Boxing Day in Montreal, Tuesday, December 26, 2023.

Image Credit: THE CANADIAN PRESS/Graham Hughes

With Christmas and Boxing Day in the rear-view mirror, consumers have one event left for which they have to decide how much they're willing to spend: New Year's Eve.

A wide range of worries has Canadians thinking twice about indulging in lavish celebrations, from pocketbook woes to COVID-19 concerns and even angst about armed conflict abroad.

Average household spending during the holidays was slated to fall 11 per cent from last year due to persistent financial pressures, according to a Deloitte Canada study in October, one of several reports to forecast lower consumer expenditures.

"Everything is expensive," said Vivek Astvansh, a marketing professor at McGill University. Canada's consumer price index hit a record high last month, with inflation forecast to continue to climb beyond target levels well into 2024.

Ongoing price hikes will likely convince many to opt for smaller, less expensive private gatherings this Sunday, whereas those still inclined toward a bar or restaurant outing might choose a more affordable venue, Astvansh said.

Heightened global tensions and geopolitical upheaval may even be trickling down to consumer psychology and spending choices.

“There is this overall sense of doom and gloom,” Astvansh said, citing the Israel-Hamas war and Russia's nearly two-year invasion of Ukraine. "There’s a bit of unrest and discontent which is curbing people’s enthusiasm in this holiday season and heading into the new year.”

On the flipside, an escapist urge or simply the affirmation of friends and festivity will still propel revellers out on the town — "going outside, dressing up well and getting that sense of celebration, even though there might be despair in the world around them," he added.

Looking beyond Dec. 31, New Year's resolutions will also work their usual alchemy of turning pledges into profits, spurring personal spending on health, professional training and other areas of self-improvement as Canadians look to start afresh despite continuing cost increases.

"They'll pay for the next six months or one year of visiting fitness centres, having hot yoga sessions or enrolling in a new educational program. These are forward-looking people who will make these investments toward themselves now," Astvansh said.

In November, the country's inflation rate held steady at 3.1 per cent, with higher prices for recreation and clothing in particular, and staples such as food projected to become pricier still.

This report by The Canadian Press was first published Dec. 29, 2023.

News from © The Canadian Press, 2023