How Canadian Consumers Are Doing Depends on Who You Ask

Earlier today, Statistics Canada published real GDP data for the first quarter of 2026 External link.. The numbers showed an advance in consumer purchases in Q1, including after adjusting for inflation, driven primarily by services consumption. This followed the release of retail sales data showing an annualized 3.9% q/q increase in volumes to kick off the year. All in all, not a bad start to 2026 for Canadian consumers.

But while that’s good news on its face, looking under the hood suggests many Canadian households are struggling just to cover the basics. While a comparison of different hourly compensation measures with the total Consumer Price Index (CPI) shows real wages have been gaining ground since roughly mid‑2023, looking at price gains of necessities like shelter, food and energy suggests otherwise (graph 1). Indeed, median hourly wages, which are less likely to be skewed upward by higher-income earners, point to compensation that has lagged behind gains in shelter, food and, most recently, energy costs over the past four-plus years.

This is important because the lower a household’s income, the greater the share of its spending that is dedicated to shelter and food purchased from stores, even if the dollar amount is lower (graph 2). To pay for necessities whose prices are rising faster than wages, lower-income households are drawing down their savings, resorting to credit and/or cutting back on spending. This is showing up in the savings numbers, where only the top half of income earners are able to sock away cash for a rainy day. And even then, it’s really only the highest-income earners that are seeing their ability to save increase every year, while net new savings have been broadly deteriorating for other Canadians.

If getting by wasn’t challenging enough for low- and middle-income households in 2025, the energy price External link. shock of 2026 is likely making their circumstances a lot more difficult. And this is already starting to show up in the data. Last week, Statistics Canada published the final month of retail sales External link. data for the first quarter of 2026, and the news wasn’t good. While prices were up in March, sales volumes were down, and April looks as though it will be déjà vu all over again. This suggests weak consumer momentum going into the second quarter, after what was a broadly positive start to the year. It also fits with the weakness in the labour market observed since the beginning of 2026, with the Labour Force­Survey showing a decline in employment of more than 110k since the end of 2025.

Fortunately for Canadian consumers, there’s help on the way. On June 5, the federal government plans to transfer $3.1B to low- and middle-income households in the form of the Canada Groceries and Essentials Benefits, a one-time payment to all current recipients of the GST/HST credit. According to our analysis External link., this should primarily benefit families with a net household income of $50,000 or less. The Parliamentary Budget Officer External link. estimates it will work out to about $252 per recipient. That is likely to help boost the third-quarter consumption numbers, and possibly provide a helping hand to June consumer spending as well. And starting in July 2026, the annual GST/HST credit will be raised by 25%. Running this policy shock through our analytical framework suggests Q2 and Q3 2026 consumption growth could be as much as half a percentage point higher at annualized rates than it would have been without this income transfer (graph 3). Of course, this is on top of the cut to the federal excise tax on fuel that came into effect on April 20 and will remain in place until Labour Day, although this was soon swamped by the ongoing volatility of oil prices.

All in all, while times are tough for many Canadians, recently announced policy measures should help to cushion the blow. It’s no doubt cold comfort when costs remain high and employment earnings keep trailing behind inflation, but at least it’s something to help ease the pain of higher prices—if only just a little.