Canadian Households Adjust Spending Plans Amid Elevated Inflation Expectations and High Energy Prices

The Canadian economy is facing several challenges that are affecting how households build wealth. Inflation expectations and energy prices remain high, causing consumers to delay large purchases, increase precautionary savings, or reduce discretionary spending.

According to a recent consumer-expectations survey, near-term inflation expectations remain elevated compared to levels seen before trade tensions intensified. Consumers have also cited energy prices more frequently as a source of inflation concerns.

The Bank of Canada has maintained its policy rate at 2.25% while noting that the continuing Middle East conflict is keeping energy prices high. The central bank has also highlighted new US tariffs and Canadian counter-measures as additional sources of economic uncertainty.

For many Canadian homeowners, mortgage renewal can be a significant personal-finance issue, with approximately 12% of outstanding mortgages expected to renew over the next year. Borrowers with stronger income growth and substantial equity may have more flexibility, but those with weaker income growth or limited equity may have fewer refinancing options.