Inflation and interest rates drive up Canadian bankruptcies | Benefits and Pension Monitor Industry News
Canadian consumer bankruptcies hit the highest number since 2019, signaling continued financial strain.
BNN Bloomberg reports that the number of bankruptcies in Canada rose in May compared to a year ago due to continuing increases in inflation and interest rates, affecting both businesses and consumers.
The Insolvency Superintendent's Office released data on Friday showing a 19.2% increase in bankruptcies from May 2023 and a 3.1% increase from April.
Andre Balduc, president of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), said many Canadians continue to face financial difficulties: “While interest rates have fallen, the rising cost of living and high debt service costs continue to put pressure on budgets.”
Consumer insolvencies, which include both bankruptcies and debt restructurings, reached 12,195 in May, up 3.4 percent from April and up 11.3 percent from a year ago.
May marked the fifth consecutive month of increases in consumer bankruptcies, reaching the highest number since October 2019, according to CAIRP.
The number of business insolvencies fell 3.8% from April to 530, but was up 41.7% compared to last year. The construction sector saw a large increase, with 92 insolvencies, up 24.3% from April and 109.1% from May of the previous year.
CAIRP highlighted that the number of business insolvencies is significantly above pre-pandemic levels, up 67.6 percent from the figures in May 2019. The number of business insolvencies has continuously increased year-on-year for the past two and a half years.
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