The Bank of Canada published the second-quarter 2026 Canadian Survey of Consumer Expectations, which showed a slightly larger share of consumers expect inflation to be above 3% over the next 12 months. Two-year and five-year inflation expectations also edged up. At the same time, households continued to view the economic environment as difficult, with high prices and economic uncertainty still holding back spending plans. Tariffs and trade tensions remained the factor most often cited as affecting inflation, while mentions of energy prices rose sharply from the previous quarter. About 70% of consumers expected the war in the Middle East to raise inflation over the next 12 months, and households that believed it would significantly lift inflation reported weaker real spending expectations and were more likely to substitute toward cheaper essentials, reduce discretionary purchases and drive less. The survey’s labour market index improved modestly from low levels as perceived job-loss risk declined, particularly among workers in sectors more exposed to Canada-United States trade, but consumers still saw the labour market as soft and job-loss concerns remained above the historical average in sectors with higher exposure to artificial intelligence-related task replacement.
Bank of Canada2026-07-06
Bank of Canada survey shows inflation expectations edging up and household spending plans weakening
The Bank of Canada’s second-quarter 2026 consumer survey showed slightly higher inflation expectations, including a larger share of households expecting inflation above 3% over the next year. Tariffs remained the main perceived inflation driver, energy price concerns increased, and spending plans weakened as high prices and uncertainty persisted. Labour market sentiment improved modestly as job-loss fears eased, but households still viewed conditions as soft.