Survey suggests retail businesses should brace for softer spending
Canadians are concerned about the ongoing impact of US tariffs and inflation and are taking a cautious approach to the holiday season, according to a new survey.
BMO Financial Group’s survey reveals that 60% of respondents are planning to scale back their holiday expenditures this year, primarily over fears tied to tariffs and rising costs with 53% of households expecting to spend less during the season compared to last year, while a further 7% planning to delay purchases altogether.
The main reasons cited are uncertainty surrounding trade policies and inflation, with 39% of respondents citing tariffs as the driving factor.
"In the wake of recent tariff increases, rising unemployment, and an upturn in inflation, it's not surprising that Canadian consumers are feeling a sense of trepidation heading into the holiday season," says Sal Guatieri, BMO’s senior economist. "Though not elevated, annual CPI inflation has picked up to 2.4% in September after remaining below 2% in the previous five months, partly due to a 3.8% rise in food costs. By weakening the economy, the trade war has lifted the unemployment rate, undermining consumer confidence and income growth."
In addition, the poll highlights that younger Canadians (ages 18–34) are the most likely to alter their plans, with two-thirds indicating they will cut back. Gifts, travel, and dining out are the areas seeing the biggest impact with travel plans in particular being disrupted as 45% say they might reduce or cancel trips.
READ: Budget festive season as Canadians tighten belts ahead of Christmas
BMO warns that businesses should brace for a more conservative shopping season, particularly if trade developments spur further increases in costs. The bank notes that while holiday spending is still projected to grow, the pace may be muted relative to historic trends.
"With concerns about the rising cost of living and economic uncertainty shaping holiday plans, Canadians are showing resilience by budgeting earlier, shopping mindfully, and prioritizing what matters most," said Tony Tintinalli, head of Specialized Sales at BMO.
