The accumulation of credit card debt accelerated in December, according to new data from Statistics Canada.
The national statistical agency reported that total household borrowing rose by $7.5 billion in December, up 0.3%, driven by an increase in mortgage debt (0.3%) and little change in other borrowing, up just 0.1%.
Yet the growth of credit card debt accelerated in December, rising from a 0.7% growth rate the previous month to 0.9% in December.
StatsCan noted that the rise in credit card debt came amid an increase in retail sales, up 0.5% in the month according to early estimates, after a decline of 0.1% in November.
On a year-over-year basis, credit card debt grew at a 13.8% annual rate in December, compared with 4.7% for the same period in 2021.
“Along with persistently high inflation over the course of 2022, evidence suggests that more vulnerable households increased their debt to make ends meet,” StatsCan said.
At the same time, the growth of mortgage debt slowed, from a 10.5% annual pace in 2021 to 7.1% in 2022, it said.
The slowdown in mortgage borrowing came amid a sharp increase in the policy interest rate, with the seventh rate hike of the year in December pushing the Bank of Canada’s key rate to 4.25%.
“Despite this, the volume of existing home sales rose 1.0% in the final month of 2022, following a 3.2% drop in November,” StatsCan noted.