Consumers continue to express concerns about high prices and economic uncertainty stemming from the U.S. trade conflict, despite some positive signs, as per the latest Bank of Canada survey. The survey respondents anticipate a higher risk of missing debt payments and losing their jobs, with inflation expected to remain elevated mainly due to tariffs.
These worries have dampened their spending intentions, with respondents citing high prices, economic instability, and increased housing expenses as obstacles to spending. More respondents felt that their financial situation had worsened compared to the previous quarter.
On a positive note, the survey participants felt more optimistic about job prospects this quarter and expressed a more favorable long-term outlook on inflation compared to pre-pandemic levels. However, overall consumer expectations decreased in the fourth quarter and remain below pre-pandemic levels, particularly since the onset of the trade conflict with the U.S.
Claire Fan, a senior economist at RBC, highlighted the widening gap between consumer sentiment and actual economic data over the past year. While the Canadian economy has shown resilience, with job growth rebounding and inflation staying within target levels, concerns about a weak labor market persist, especially among workers in trade-exposed industries.
A significant portion of survey respondents believe that Canada has avoided the worst impacts of trade tensions with the U.S., indicating a shift from previous sentiments. Fan acknowledged this shift but emphasized lingering uncertainties regarding Canada’s future trade relations with the U.S., particularly concerning tariffs and trade agreements.
The rising cost of living, particularly in food and shelter expenses, has been a major concern for consumers. Grocery prices surged by 3.5% in 2025, significantly higher than the average in 2024, as per a recent StatsCan report. Consumers like Brad Berg in Calgary are adjusting their spending habits in response to escalating prices, emphasizing the challenges faced by lower-income households.
Experts, including food economist Mike von Massow, noted that consumers are more sensitive to price increases in regular expenses like groceries. This heightened awareness of rising costs contributes to negative consumer sentiment, even as some indicators stabilize or improve. Fan echoed these concerns, emphasizing the impact on vulnerable households facing economic challenges.
The ongoing uncertainties in the economic landscape underscore the complex interplay of consumer sentiment and economic realities, with the aftermath of the trade conflict continuing to shape Canadians’ financial outlook.