The Bank of Canada’s Canadian Survey of Consumer Expectations for the third quarter of 2026 found that long term inflation expectations rose to match already elevated expectations for the next one and two years. Consumers continued to identify tariffs, trade tensions and energy prices as key inflation drivers. Spending intentions weakened despite improvements in perceived financial health and labour market conditions, with high prices and economic uncertainty weighing on purchases. Inflation expectations were slightly higher at all horizons among respondents surveyed after Canada–United States trade talks broke down on August 21. However, 77% of responses were collected on or before that date, and differences in sample composition may partly explain the gaps. Consumers reported a lower perceived risk of missing debt payments and easier access to credit. Higher financial asset values and greater confidence in the labour market supported expectations of improved finances, although these responses preceded September’s surge in bond yields. Labour market perceptions improved modestly but remained below the survey average. Views improved among workers in sectors more dependent on trade with the United States, while deteriorating among those in sectors where artificial intelligence poses a higher risk of replacing tasks. Spending plans declined from already weak levels, with high prices remaining the leading barrier. About half of consumers expected a recession over the next 12 months. Separately, 46% believed the most serious effects of trade tensions on inflation or the economy were still ahead, and these respondents were more likely to postpone major purchases. Spending intentions were also weaker among households expecting the war in the Middle East to raise inflation significantly.

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