Document Highlights
Real household consumption will grow by 4.4 per cent in 2022 and 3.2 per cent in 2023. Household spending will shift toward services in 2022, while the consumption of goods will ease.
Optimism over the lifting of restrictions is being overshadowed by pessimism in the face of recent events. Inflation and the war in Ukraine will weigh on consumer confidence.
Spending on durable goods like motor vehicles will be muted in 2022. The availability of motor vehicles remains a problem in the wake of supply chain logjams and shortages of components. These setbacks have been worsened by the Ambassador Bridge blockade and the war in Ukraine.
The Consumer Price Index (CPI) is forecast to rise by 5.5 per cent in 2022 and by 2.6 per cent in 2023. Rising food and transportation prices will be major contributors to overall price growth.
The Bank of Canada has started to raise interest rates to ease inflation. High debt levels relative to incomes could spell trouble for some households as rates rise.
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