Insolvencies on the rise as Albertans struggle with inflation

The Bank of Canada's eighth rate hike in less than a year is coming at a tough time for many Albertans.

The central bank raised its overnight rate by 25 basis points Wednesday, moving its policy rate to 4.5 per cent.

It says it has been seeing small declines in inflation, but life for many in the province is still far too expensive.

The Office of the Superintendent of Bankruptcy says in Alberta, there was an 8.5 per cent year over year insolvency jump in November.

The 1,402 filings in the month mark the highest volume since March 2020.

Experts say the rising cost of living and increasing debt are the culprits.

"People are not getting (wage) increases at all during a time when they're forking out over six per cent more in their expenses," Bromwich and Smith's Laurie Campbell said.

"So how are people bridging the gap? They're using credit, unfortunately, and that, as we all know, only turns into a downward spiral."

And those who rely on variable lending could be in for more hurt after the central bank's latest announcement.

Many are predicting a turbulent 2023.

"I see these insolvency increases continuing for the next 12 months as people adjust to these interest rates and inflation that has really not gone down to any significant degree," Campbell told CTV News.

The Bank of Canada says inflation is tapering off, but just not nearly enough.

Decreases in gasoline and durable goods prices have helped, but the things most Canadians are really looking for – drops in food and shelter – haven't materialized.

It's still unclear if the rate hikes will affect those core elements.

And, of course, not everyone is impacted in the same way.

"If you need to borrow right now, it's a very painful environment," Colliers Canada research head Adam Jacobs said.

"But there's the cash-rich investors who are probably going to have the upper hand in the market."

The latest rate hike is the eighth in the past ten months and highest mark since 2007.

"What's difficult right now for the banks – and why they're caught in the middle a little – is just the core elements of life," Jacobs added.

"We are still seeing a lot of inflation there and I'm not sure when that's going to end."

Duane Rockerbie, professor of economics with the University of Lethbridge, is looking south for a hint at the answer.

"Inflation has also been tempered quite a bit in the United States. So we're looking at that as hope that the policy is working and that by the end of the year or early next year, inflation will back within the target," Rockerbie said.

Meanwhile, real estate still seems to be moving.

"Real estate has been selling like it has been. But perhaps it's a little bit more difficult when your rate is getting over five per cent," said Jennifer Brodoway, View Lethbridge Realtor.

"Last year, we had just over 18,000 people migrate from Ontario to Alberta, and just under 7,000 from British Columbia to Alberta," said Heleen Jacobsen of Lethbridge and District Association of Realtors.

"So the strong migration, the economy, truly our expectations are that our province will do really well."

(With files from Quinn Keenan)