Consumers remain worried about high prices and economic instability stemming from the U.S. trade dispute, despite some positive economic indicators, as per a recent Bank of Canada survey. The survey participants expressed concerns about the likelihood of missing debt payments, job loss, and ongoing high inflation due to tariffs.
These worries impacted their spending intentions, with respondents citing high prices, economic uncertainties, and increased housing costs as deterrents to spending. More respondents believed their financial situation had worsened compared to the previous quarter.
On a positive note, respondents were more optimistic about job prospects in the current quarter and anticipated lower long-term inflation levels. However, overall consumer expectations declined in the fourth quarter and remained below pre-pandemic levels, especially compared to before the trade conflict with the U.S. began.
The Bank of Canada survey revealed that most respondents felt Canada had managed to avert the worst effects of trade tensions with the U.S. Many believed the worst was over, although uncertainties persist regarding the future of Canada’s trade relations with the U.S.
Despite headline inflation stabilizing, food and shelter costs continue to be significant factors. Grocery inflation spiked to 3.5% in 2025, up from 2.2% in 2024, according to a recent StatsCan report. Consumers like Brad Berg in Calgary are feeling the impact, adjusting their spending habits due to rising prices.
Food economist Mike von Massow noted that consumers are more sensitive to price increases at the grocery store, affecting their overall economic morale. This negative sentiment is particularly challenging for lower-income households facing financial constraints.
Economist Claire Fan pointed out that rising expenses, particularly for essential items like groceries, can disproportionately burden lower-income families. The ongoing challenges in the economy are likely to continue affecting consumer sentiment until there is a noticeable shift in the trend.