Consumer Expectations on Inflation Rise in Canada: Q3 2026 Survey Results

The Canadian Survey of Consumer Expectations for the third quarter of 2026 indicates a notable rise in consumer inflation expectations. Conducted from August 5 to 27, the survey captured responses primarily before the breakdown of trade talks between Canada and the United States on August 21. This context is crucial as it allows for a comparison of consumer sentiment before and after significant trade developments.

Overall, consumers' perceptions of current inflation and their expectations for the next 12 and 24 months have remained relatively stable. However, long-term inflation expectations have increased, now matching the already elevated short-term expectations. Respondents continue to identify tariffs and trade tensions as primary contributors to inflation, with a marked increase in mentions following the collapse of trade negotiations.

Energy prices also remain a significant concern, although fewer respondents cited them compared to the previous quarter. Many consumers believe that ongoing conflicts, particularly in the Middle East, will exacerbate inflation in the coming year. One respondent noted that geopolitical events tend to influence global economies, particularly through oil prices, which subsequently affect the prices of essential goods.

The survey results indicate that consumers who responded after the trade talks collapsed reported higher inflation expectations across all time horizons. This sentiment reflects a growing apprehension about potential future tariffs and their impact on prices. One participant expressed concern over the likelihood of increased tariffs on Canadian products, highlighting the uncertainty surrounding trade relations.

Consumer Confidence Shows Mixed Signals Amid Inflation Concerns

The Canadian Survey of Consumer Expectations indicator saw a slight increase in the third quarter, primarily due to improved perceptions of financial health among consumers. While views on the labor market also showed modest improvement, spending intentions declined, with many consumers citing high prices as a barrier to spending. This cautious approach to spending is particularly evident among households anticipating significant inflation due to geopolitical tensions.

Despite some positive shifts in financial confidence, concerns about job security remain prevalent, especially among workers in sectors vulnerable to trade fluctuations. The labor market index showed signs of recovery, yet fears of job loss persist, particularly in industries heavily reliant on trade with the United States.

Navigating Consumer Sentiment in an Uncertain Economic Landscape

As the survey included questions about the use of artificial intelligence (AI) in the workplace, it revealed that approximately 40% of workers reported utilizing AI tools, primarily for tasks that enhance productivity. Workers indicated that the time saved through AI usage allows them to improve the quality of their work or take on additional responsibilities. However, a significant portion of workers who do not currently use AI expressed that it is not relevant to their roles.

Overall, the survey highlights the complex interplay between consumer expectations, trade relations, and broader economic conditions. As uncertainty looms regarding inflation and economic stability, consumers remain cautious in their spending habits, reflecting a broader sentiment of apprehension about the future of the Canadian economy.