Canada: Spending resilience with energy pressures – RBC

Royal Bank of Canada (RBC) analysts Rachel Battaglia and Abbey Xu note Canadian consumers kept spending in Q2 despite weak real wage gains and higher energy costs. They highlight that fuel outlays are taking a larger budget share, yet discretionary goods and services spending, including sports-related activity, rebounded. Insolvencies remain below pre-pandemic levels, supporting a cautiously optimistic outlook for consumption through 2026.

Consumers juggle fuel costs and spending

"Canadian consumers continued spending through another challenging quarter, likely drawing on savings or taking on more debt to maintain consumption patterns amid weak real wage gains and higher energy costs."

"Energy costs are eating up a larger share of consumer budgets due to prices spiking in early March—likely forcing Canadians to dip into savings or take on more debt to keep up with rising costs."

"Per capita insolvencies remain below pre-pandemic levels, suggesting consumers still have the capacity to weather current pressures."

"Outside of fuel, broader spending strengthened lead by a rebound in discretionary goods purchases and maintained strength in discretionary services amid FIFA and other summer events."

"The broader economy is improving, supporting our cautiously optimistic outlook that consumers will continue spending over the remainder of 2026."