According to the results of the Consumer Expectations Survey (CSCE) for the third quarter of 2026 released by the Bank of Canada on October 19, consumers' long-term inflation expectations have risen to match the already high levels of short-term expectations. Consumers cited trade tensions and energy prices as major factors driving up prices, and it was found that inflation expectations for all periods have increased since the breakdown of trade negotiations between Canada and the United States.
- Perceptions of household financial status improved slightly compared to the previous quarter, thanks to the rise in financial asset values and confidence in the labor market.
- Nevertheless, spending plans have further contracted from an already weak level. High prices for goods and services and economic uncertainty were cited as the biggest reasons hindering consumption, and many respondents stated that they are cutting back on dining out and seeking discounted products or affordable alternatives.
- While perceptions of the labor market approached the survey average, sector-specific differences were observed, with improvements in industries more exposed to trade with the U.S. and deterioration in industries at high risk of AI replacing jobs.
- According to various reports, about half of the respondents predicted that the Canadian economy could enter a recession within the next 12 months. This is not a confirmed forecast, but a survey result reflecting consumer expectations.
If you are a household facing a major expense or mortgage renewal, it may be helpful to plan while keeping an eye on rising inflation expectations and the Bank of Canada's interest rate decision scheduled for October 28.
Source: Bank of Canada https://www.bankofcanada.ca/2026/10/canadian-survey-of-consumer-expectations-third-quarter-of-2026/ |
