Consumers remain concerned about high prices and economic uncertainty stemming from the U.S. trade conflict, despite some positive signs, as per a new Bank of Canada survey released on Monday. The survey participants expressed fears of struggling to make debt payments, facing job losses, and anticipating continued elevated inflation due to tariffs.
These worries are influencing their spending behavior, with respondents citing obstacles such as high prices, economic uncertainty, and increased housing expenses. More respondents compared to the previous quarter perceived a decline in their financial situation.
However, there were also bright spots in the survey findings. Respondents felt more optimistic about job prospects and long-term inflation compared to the previous quarter. Yet, overall consumer expectations dipped in the fourth quarter, remaining below pre-pandemic levels and lower than before the U.S. trade conflict.
According to RBC’s senior economist Claire Fan, the gap between consumer sentiment and actual economic data has been widening over the past year. Respondents in the survey indicated that the worst of the trade war has passed for Canada.
Although the Canadian economy showed resilience compared to worst-case scenarios predicted by analysts and economists last year, concerns persist, particularly among workers in trade-exposed industries. The survey revealed that many believe Canada has navigated the worst effects of trade tensions with the U.S., although uncertainties remain about the future of trade relations and agreements.
In terms of everyday impacts, rising living costs, especially grocery expenses, are hitting consumers hard. A shopper in Calgary mentioned cutting back on spending due to escalating prices, particularly for food items. Despite stable headline inflation, food and shelter costs are major contributors, with grocery inflation reaching 3.5% in 2025, up from 2.2% in 2024.
The emotional response to price increases is heightened in regular expenses like groceries, leading to a more negative consumer sentiment. This trend may disproportionately affect lower-income households, who face challenges in coping with rising costs. Experts emphasize the psychological impact of price changes and the time it takes for consumers to adjust their perceptions.
The sentiment that the worst of the trade conflict is behind Canada aligns with macroeconomic trends, but uncertainties loom over the future trade landscape, including tariff regulations and trade agreements with neighboring countries.