Consumer Spending Strengthens as Holiday Promotions Boost Activity
Index of Consumer Spending
The Index of Consumer Spending (ICS) rose to 119.2 points in November, a 2.0 per cent increase from October (April 2022 = 100). This is the strongest monthly gain since May and reflects households leveraging seasonal promotions and easing price pressures, despite ongoing financial caution.
- Consumers responded to Black Friday and Cyber Monday deals by increasing transaction volumes, particularly in apparel and electronics. While higher volumes lifted the ICS, heavy discounts meant that the total dollar value of purchases grew more slowly than activity levels. This highlights a shift toward strategic shopping, where households concentrate purchasing power during discount windows to manage non-essential spending.
- A 7.8 per cent year-over-year decline in gasoline prices increased the available cash flow for many households during the month. However, Statistics Canada reported that this price drop was largely offset by a 4.7 per cent increase in food inflation, which reached its highest level since late 2023, primarily due to rising costs of beef and coffee. The intensity of inflation in essential grocery categories led households to reallocate funds away from retail purchases, limiting the upward momentum of the index.
- The Canadian economy added 54,000 jobs in November, with the majority of these gains occurring in part-time positions within the retail and hospitality sectors. Statistics Canada’s Labour Force Survey shows these roles lowered the unemployment rate to 6.5 per cent and provided a seasonal increase in household liquidity, supporting the higher volume of retail transactions observed during the month.
- Average hourly wages grew by 3.6 per cent and continued to outpace the headline inflation rate, according to Statistics Canada data. This wage growth supported household spending on essential goods and services. However, the slowing pace of wage growth compared to earlier in the year is compressing discretionary spending. Prime lending rates held steady at 4.45 per cent, as the Bank of Canada maintained a neutral policy stance. However, the delayed impact of mortgage renewals continues to influence household budgets. This has contributed to a regional economic divide, where provinces with lower housing costs saw energy savings flow into retail sales, while higher-debt regions like Ontario saw more spending directed toward interest obligations.
- Furniture and electronics sales saw a 1.1 per cent jump in November, according to Statistics Canada’s preliminary estimates. Insights from the Bank of Canada’s Canadian Survey of Consumer Expectations suggest some consumers engaged in anticipatory buying, moving major purchases forward in response to trade uncertainty and proposed import tariffs to avoid potential price increases in 2026.
- Digital shopping reached an estimated 14 per cent of total transactions, as e-commerce became a more frequent tool for price management. Data from Visa Canada and Mastercard SpendingPulse indicates consumers are using online platforms for price shopping and bulk-buy opportunities for items such as household cleaning supplies and non-perishables. This is helping maintain overall transaction volume even as retailers compress profit margins to remain competitive.
Digital shopping reached an estimated 14 per cent of total transactions, as e-commerce became a more frequent tool for price management.
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. The responsibility for the findings and conclusions of this research rests entirely with Signal49 Research.