Results of the first‑quarter 2026 survey | Vol. 7.1 | April 20, 2026
The Canadian Survey of Consumer Expectations was conducted through an online panel from February 5 to 25, 2026, before the war in the Middle East began. Follow‑up phone interviews took place from February 24 to March 2, 2026. This quarter’s publication incorporates results from a special survey, conducted between March 26 and April 2, 2026, on how the war in the Middle East is affecting consumers' views and behaviours.
Overview
- In the first quarter of 2026, before the war in the Middle East, consumers’ spending plans remained muted, held back by concerns about high prices and economic uncertainty. Still, consumers became less negative about their spending plans than in the previous quarter as downward pressure from trade tensions eased.
- Consumers continued to view the labour market as soft, with fears of losing their job still elevated. This quarter, concerns about job losses increased among workers in sectors where artificial intelligence poses a higher risk of task replacement.
- Before the war in the Middle East, near‑term inflation expectations were largely unchanged and still above the survey’s historical average. Expectations of strong food price inflation remain an important driver of high one‑year‑ahead inflation expectations. Long‑term inflation expectations declined slightly from 12 months ago.
- Results of a special survey conducted after the outbreak of the war in the Middle East suggest most households expect the war to weaken the Canadian economy and raise prices.
Trade tensions are weighing a little less on consumers
The Canadian Survey of Consumer Expectations (CSCE) indicator rose slightly from recent lows (Chart 1), with US trade actions having less of an impact on consumers.1 Despite this improvement, the indicator remains below the level it was at just over 12 months ago before the start of trade tensions with the United States.
Chart 1: The CSCE indicator slightly improved from low levels
Consumer spending plans are improving
In the first quarter of 2026, before the war in the Middle East began, consumers had become less negative about their spending plans (Chart 2). The improvement from the previous quarter was concentrated among workers in trade-sensitive sectors, suggesting that trade policy uncertainty is weighing less on consumers’ spending plans (Chart 3). Regarding the impact of trade tensions on the economy, one respondent said, “I think maybe we’re through the worst of it now…. It changed with the actions of the Supreme Court in the USA,” referring to the US Supreme Court’s decision that invalidated some US tariffs on Canada.
Chart 2: Households are less pessimistic about their spending plans
Chart 3: Workers in sectors more exposed to trade are behind improvements in spending plans
However, high cost of living continues to be a widespread concern for consumers. High prices for goods and services as well as economic uncertainty continue to dampen consumers’ spending plans (Chart 4).
Chart 4: Concerns about high prices and economic uncertainty continue to weigh on consumer spending plans
As in past quarters, consumers continue to substitute toward goods made in Canada and vacations within the country. At the same time, they plan to keep spending less on goods made in the United States and vacations there.2 Most respondents expect this spending behaviour to persist over the long term, regardless of what happens with Canada’s trade relationship with the United States (Chart 5).
Chart 5: Consumers expect their preference for Canadian goods to persist
Consumers still see the labour market as soft
The CSCE labour market index has changed little over the past 12 months and remains well below its level before the start of trade tensions (Chart 6). Consumers’ perceived chances of voluntarily leaving a job or finding a job were nearly unchanged relative to the previous quarter. By contrast, the perceived probability of losing a job increased marginally and remains above the level recorded before the start of trade tensions. In follow-up interviews, one person noted, “There are lots and lots of lost jobs because of the fact that we cannot sell to the States, or that the market has become prohibitive.”
Chart 6: Consumers continue to perceive the labour market as being soft
At the same time, consumers reported other sources of perceived job insecurity. For example, public sector workers reported a greater perceived likelihood of job loss compared with the previous quarter, potentially reflecting concerns about the federal government’s ongoing comprehensive expenditure review. Job loss concerns also increased this quarter among workers in sectors where more than one‑fifth of employees are in jobs whose tasks may be more replaceable by artificial intelligence (AI) (Chart 7) (see Box 1 on how consumers perceive that AI is impacting their work).
Chart 7: Workers in sectors with more jobs whose tasks AI may replace reported higher job loss concerns
Consumers still believe prices will rise faster than the survey’s historical average
Before the war in the Middle East, consumers’ perceptions of current inflation and their expectations for inflation over the next one and two years were largely unchanged from the previous quarter (Chart 8). Inflation expectations for these horizons have changed little over the past 12 months and are still above the survey’s historical average. Long‑term inflation expectations declined slightly from 12 months ago.
Chart 8: Consumers’ near-term inflation expectations are largely unchanged and remain above average
Near‑term inflation expectations, before the start of the war in the Middle East, appear to be partly driven by high inflation in food prices (Chart 9). Survey results for the full range of one-year-ahead inflation expectations indicate that consumers in the top half of the range tend to also report expectations for high food price inflation over the next 12 months.
Chart 9: Food price inflation remains a key driver of high inflation expectations over the next 12 months
Before the war in the Middle East, consumers believed tariffs and trade tensions remained the most important factor affecting the Bank of Canada’s ability to control inflation in the near to medium term.
The results of a special survey conducted after the outbreak of the war suggest households expect the war to raise inflation, particularly through higher gasoline and food prices (see Box 2 on household views on the war in the Middle East).
Box 1: Workers expect artificial intelligence to boost their productivity
This quarter, the Canadian Survey of Consumer Expectations included questions on whether and how workers are using artificial intelligence (AI) on the job and how AI is shaping their perceptions of job conditions.
Workers are mainly using AI for tasks that improve their individual productivity, such as writing, planning and data analysis (Chart 1‑A). Fewer consumers reported AI being used in core business processes, where AI tools are embedded in activities like automating workflows. In follow‑up interviews, one person noted, “I think it can help and take care of mundane tasks that you don’t need to think about.”
As a result, early gains from AI adoption could partly reflect improvements in worker efficiency. Broader firm‑level productivity gains may take longer to materialize until AI becomes more fully integrated into production processes and operations. As one respondent explained, “Right now, it’s the beginning of AI…. It is used as an aid, not as a replacement.”
Chart 1-A: Use of artificial intelligence is widespread among workers and across tasks
Although AI is being used for a range of workplace tasks, few workers assign a greater than 50% chance that AI will significantly affect their work over the next year. Among workers who are more convinced AI will affect their work, those who already use AI in their jobs are more likely to expect AI to improve their productivity over the next year (Chart 1‑B). These workers also report stronger expectations for wage growth than those who do not use AI at work. However, all workers—those who do and don’t use AI at work—expect a modest negative net impact on their employment prospects and to work fewer hours.
Chart 1-B: Workers expect artificial intelligence to improve their productivity regardless of whether they currently use it at work
Box 2: Households expect the war in the Middle East to weaken the economy and raise prices
After the outbreak of the war in the Middle East, Bank of Canada staff conducted an online survey of about 600 Canadian households. The survey aimed to gauge the initial impact of the war on households’ expectations and behaviours. Nearly all respondents were aware of the war, and households had mixed views about how long it will last. Respondents most often said they expected the war to last for more than six months.
A strong majority of households expect the war to harm the Canadian economy and lead to higher inflation (Chart 2‑A). Households in the Prairie provinces are more optimistic than households in other provinces but still expect the net impact will be negative for the economy. Households expect the duration of the conflict to matter for prices of key goods:
- If the war persists, consumers expect to see marked increases in gasoline and food prices over the next 12 months (Chart 2‑B).
- If the war is quickly resolved, consumers expect price growth for gasoline and food to be substantially slower over the next 12 months than it would be if the war persisted. In this scenario, many respondents expect gasoline prices to fall after having increased.
Households expressed concern about the implications of the conflict, and some reported having changed their spending behaviour in response. Among respondents, 21% have cancelled or postponed trips, mainly due to increases in travel costs, and 28% have postponed or reduced major spending more broadly. These results are consistent with findings from the Business Outlook Survey that firms expect households may reduce their discretionary spending because of higher gasoline prices.3
Chart 2-A: Households anticipate the war in the Middle East will lead to higher inflation and have a negative impact on the Canadian economy
Chart 2-B: Households expect a prolonged war will substantially increase gas and food prices
Endnotes
- 1. For more information about the CSCE indicator, see J. Dolinar, P. Sabourin and M. West, “Synthesizing Signals from the Canadian Survey of Consumer Expectations,” Bank of Canada Staff Discussion Paper No. 2025‑11 (July 2025).[←]
- 2. For more, see O. Bilyk and J. Dolinar, “Assessing the Buy Canadian movement one year later.” Sparks at Bank. Bank of Canada, February 2026.[←]
- 3. See Bank of Canada, “Box 1: The war in the Middle East is changing firms’ outlooks for prices,” Business Outlook Survey—First Quarter of 2026 (April 2026).[←]
The Canadian Survey of Consumer Expectations gathers respondents’ views on inflation, the labour market and household finances. Additional information on the survey and its content is available on the Bank of Canada website. The survey report summarizes opinions expressed by the respondents and does not necessarily reflect the views of the Bank of Canada.