Consumers Pull Back Spending After the Holiday Season
Index of Consumer Spending
The Index of Consumer Spending (ICS) averaged 96.1 points in January, an 18.2‑point drop from December (the month of April 2022 = 100).
- The ICS drop in January parallels the year prior. However, the ICS is sitting at 96.1 points compared with January of last year when it sat at only 83.0 points.
- All regions this month experienced declines in spending, the largest of which occurred in Prince Edward Island (down 29.0 points) and the smallest in Nunavut (down 2.7 points).
- As the data are not adjusted for seasonality, they reflect seasonal trends. Due to this, a drop in spending in January is not unexpected as consumers typically pull back spending after the holiday season.
- In January inflation fell to 2.9 per cent from 3.4 per cent in December. As inflation continues to cool, the Bank of Canada will begin to shift focus to interest rate cuts. As interest rates lower and households’ financial positions improve, spending will accelerate.
- We forecast the first cut to the overnight interest rate to occur in June of this year, followed by gradual cuts throughout the remainder of 2024 and into next year.
Alberta
ICS declined 21.0 points.
Alberta’s January ICS had the province decreasing from 118.4 to 97.4 points.
British Columbia
ICS slid 17.1 points.
With data for January, British Columbia’s ICS dropped to 92.6 points from 109.7 points the month prior.
Manitoba
ICS decreased 23.5 points.
Manitoba’s January ICS fell to 100.5 points (down from 124.1 points).
New Brunswick
ICS dropped 20.6 points.
New Brunswick’s January ICS dropped from 119.2 to 98.6 points.
Newfoundland and Labrador
ICS declined 25.8 points.
Newfoundland and Labrador’s January ICS saw a sizable decrease from 124.5 to 98.7 points.
Northwest Territories
ICS shrunk 12.4 points.
The Northwest Territories’ January ICS dwindled to 102.1 points.
Nova Scotia
ICS fell 26.9 points.
Nova Scotia’s January ICS decreased to 103.2 (down from 130.1 points).
Nunavut
ICS fell 2.7 points.
Nunavut’s January ICS showed the territory falling to 94.9 points. This is the third month in a row of decline for the region.
Ontario
ICS decreased 15.0 points.
Ontario’s January ICS had the province fall to 92.0 points—a drop from its December 2023 value of 107.0.
Prince Edward Island
ICS decreased 29.0 points.
Prince Edward Island’s January ICS has the province sliding to 98.0 points from 127.0 points in December last year.
Quebec
ICS fell 21.9 points.
Quebec’s January ICS was 107.0 points (down from 128.9 in December last year).
Saskatchewan
ICS had a small drop of 19.1 points.
Saskatchewan’s January ICS showed the province dropping to 89.9 points. This marks seven consecutive declines for the province.
Yukon
ICS dropped 10.7 points.
Yukon’s January ICS fell to 95.5 points from 106.2 points. This marks six consecutive monthly declines.
A drop in spending in January is not unexpected as consumers typically pull back spending after the holiday season.
Powered by Moneris Data Services
The Index of Consumer Spending is powered by exclusive consumer transaction data provided by Moneris Data Services. Moneris is Canada’s number one payment processor with over 3.5 billion transactions spanning more than 325,000 merchant locations. Our index tracks incremental changes in net transaction volume month-over-month from a set starting point (April 2022 = 100), enabling us to gauge economic activity levels across the country and provide insights into how the Canadian economy is performing coast to coast.
Updates on this index will be released monthly.
The Index of Consumer Spending’s (ICS) methodology has been revised for releases from January 2024 onwards. The ICS no longer tracks the weekly year-on-year changes in consumer spending. Instead, the ICS now tracks the incremental changes in net transaction volume month-over-month, from a set starting point (April 2022 = 100).
Disclaimer: Forecasts and research often involve numerous assumptions and data sources and are subject to inherent risks and uncertainties. This information is not intended as specific investment, accounting, legal, or tax advice.