Canadian Survey of Consumer Expectations—Second Quarter of 2026

Results of the second-quarter 2026 survey | Vol. 7.2 | July 6, 2026

The Canadian Survey of Consumer Expectations was conducted through an online panel from April 27 to May 21, 2026. Follow-up phone interviews took place from May 22 to 27, 2026.

Overview

• A slightly larger share of consumers than in the previous quarter expect inflation to be above 3% over the next 12 months. Moreover, two- and five-year-ahead inflation expectations edged up. While tariffs were still the most frequently cited driver of inflation, mentions of energy prices rose sharply from the previous quarter.
• Concerns about high prices and economic uncertainty are still holding back consumer spending plans. Spending expectations are weaker among households that believe the war in the Middle East will significantly raise inflation. These households are more likely than others to substitute for cheaper essentials, curtail discretionary spending and drive less.
• Consumers’ perceptions of the labour market improved modestly from their low levels in the previous quarter. This improvement reflected a decline in the perceived risk of losing a job, particularly among workers in sectors more exposed to trade.

Near-term inflation expectations remain above levels seen before trade tensions began

Consumers’ perceptions of current inflation and expectations for inflation over the next 12 months were little changed, while two-year-ahead expectations rose slightly (Chart 1, blue, yellow and green lines). Near-term expectations remain above levels seen before the start of trade tensions. Expectations for inflation over the next five years edged up after easing in recent quarters (Chart 1, red line).

The share of consumers expecting inflation to be above 3% over the next 12 months increased slightly from last quarter (Chart 2, red and orange bars).

Consumers continued to cite tariffs and trade tensions as the most important factor affecting inflation (Chart 3). In follow-up interviews, one respondent said, “Where I work, a lot of raw material is used. ... [Tariffs have raised] substantially the price of the item itself plus the cost to ship it, so we have to pass that cost on to our customers.”

However, in the second quarter of 2026, consumers increasingly cited energy prices as a source of inflation. About 70% of consumers expect the war in the Middle East to raise inflation over the next 12 months. In follow-up interviews, several consumers linked the war to concerns about higher gasoline prices. As one respondent stated, “I think we're just starting to see the beginnings of the [price] increases, and it will possibly have repercussions on all sectors unless there is a change in the situation.” Another said they believe the economic effects remain limited: “To be honest, other than the price of gasoline per litre, I haven't really noticed any differences.”

Households continue to view the economic environment as challenging

The CSCE indicator remains low as households continue to report affordability concerns linked to the high cost of living (Chart 4).1 This sentiment is reinforced by US tariffs and trade uncertainty as well as the war in the Middle East. At the time of the survey, most households expected the war to end within the next 12 months and to negatively impact the economy. The spending index eased slightly as households scaled back their spending plans amid expectations that the war will push inflation higher. Despite this, the labour market index edged up as concerns about losing a job eased, particularly for those working in sectors highly sensitive to trade.

The war in the Middle East is dampening spending plans

Consumer spending intentions edged down in the second quarter of 2026, partially reversing gains in the previous quarter. This decline coincides with concerns that the war in the Middle East will push inflation higher. Households that think the war will significantly raise inflation report weaker expectations for growth in real spending than other households (Chart 5).2

Households expecting the war to raise inflation significantly are also more likely to report other spending changes, such as substituting toward cheaper essentials, reducing discretionary purchases and driving less (Chart 6, yellow bars). One respondent noted that “we do less travelling now,” and another said, “we used to dine out…we don’t do that often anymore. We don’t travel that much by car because gas is high.”

Consumers continue to report widespread concerns about high prices, which, along with economic uncertainty, remain the top barriers to spending (Chart 7). Beyond the war in the Middle East, many consumers also believe trade tensions are raising prices and contributing to economic uncertainty. One consumer said, “We're currently heading into negotiations regarding [the] Canada-US-Mexico trading agreement. ... There's no way to know if tariffs will double, stay the same or be halved.” Most consumers—though fewer than last quarter—continue to believe that the most serious effects of trade tensions are still ahead.

Household spending intentions remain weak overall. However, a one-time top-up to the Canada Groceries and Essentials Benefit appears to support spending for some households (see Box 1 on whether households expect to receive the payment and how much of it they plan to spend).

Consumers’ perceptions of a soft labour market persist despite less concern about losing their job

The CSCE labour market index increased slightly in the second quarter from low levels. The improvement reflects a decline in consumers’ perceived probability of losing a job (Chart 8, blue bars), which is now close to the level recorded before trade tensions began.

In the second quarter, the perceived risk of job loss fell more among workers in sectors highly dependent on trade between Canada and the United States than among other workers (Chart 9). Despite this, job-loss concerns among workers in the most trade-exposed sectors remain higher than for workers in other sectors. Public sector workers also reported a decline in their perceived risk of losing their job.

Despite this improvement, consumers continue to perceive the labour market as subdued, partly due to ongoing economic uncertainty and concerns about artificial intelligence (AI). The perceived risk of losing a job remains above the historical average among workers in sectors where exposure to task replacement by AI is higher.3 As one respondent noted, “Companies are implementing AI, and jobs are going to be cut as a result.” Reflecting broader uncertainty, another respondent said, “Everyone’s kind of at a standstill, and that’s partly why hiring is affected. There’s so much uncertainty that companies don’t necessarily dare to hire, even if other prospects might be good, because of the unpredictability.”

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.