Consumer spending growth has been trending downward in recent months and continued throughout August. The Index of Consumer Spending fell to a new record low of 95.2 points during the week of August 14 and recovered only 0.5 points toward the end of August.
Demand for durable goods has been trending downward, while expenditures on services remained robust. Growth in consumer spending would have been weaker had spending on high-contact services not been strong.
Although inflationary pressures are easing, Canadians are still paying more for a basket of goods today than they were 2020 and 2021. The Bank of Canada has indicated that further interest rate increases are on the horizon, meaning that consumers will likely save more and spend less.
Canada’s unemployment rate increased for the first time in seven months, rising to 5.4 per cent in August, contributing to this month’s decelerated growth in consumer spending.
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