The Canadian Chamber of Commerce forecasts that consumer spending in Canada will slowdown in this year’s second half as elevated interest rates impact household budgets.
The Chamber expects consumer spending to slow considerably as people reduce their purchases of discretionary or non-essential items.
The Chamber notes in a new report that consumer spending started to decline noticeably after the Bank of Canada raised its trendsetting interest rate to 4.75% in June. Earlier in July, the central bank lifted its key rate again, taking it up to 5%.
The Canadian Chamber of Commerce said that rapid population growth in Canada has helped to support consumer spending in recent months.
However, while spending is up from last year, when adjusted for inflation and population growth, spending growth per person has been negative since March of this year, said the Chamber.
The Conference Board of Canada recently reported that Canadian consumer confidence declined in June after several months of gradual increases, with sentiment toward future job prospects turning negative.
