Index of Consumer Spending: August 2022
The Index of Consumer Spending is powered by exclusive consumer transaction data provided by Moneris Data Services. Moneris is Canada’s number one payment processor with over 3.5 billion transactions spanning more than 325,000 merchant locations. Our index tracks weekly year-on-year changes in consumer spending, enabling us to gauge economic activity levels across the country.
- Consumer spending growth continued to trend downward in June. The Index of Consumer Spending (ICS) averaged 101.0 points in April and 106.0 points in May, which means that, on average, Canadians spent more (year-over-year) in May than in June. Data on the ICS are available from the week of April 10, 2022, to the week of June 26, 2022.
- After reaching 105.2 points in the week of May 29, the index fell for three straight weeks to 98.9 points during the week of June 19. The ICS fell below 100.0 points and never fully recovered. In the final week of June, the index rose to 99.5 points, which means consumer spending (year-over-year) was lower at the end of June than in the week of April 10.
- Inflation reached 8.1 per cent year-over-year in June, and many Canadians have struggled to keep up with the rise in prices. According to our Index of Consumer Confidence (ICC), Canadians felt less optimistic about current and future finances in June due to persistent inflation. This decline in confidence caused Canadians to adjust their spending habits, which is why consumer spending growth slowed in June.
- Canada’s labour market continues to be a bright spot for the economy. The national unemployment rate fell from 5.1 per cent in May to 4.9 per cent in June, which is a new record low. Despite the decrease in the unemployment rate, total employment levels fell by 43,200 jobs in June. However, this decline in the employment level can be attributed to many workers aged
55 years or older leaving the labour force.
- With minimal pandemic-related restrictions in place and pent-up demand for travel, we expect Canadians will spend more on travel-related services in the summer months. However, consumer spending growth slowed in June, which signals that Canadians are adjusting their budgets to deal with rising prices and are most likely spending less (year-over-year) on retail and other services.
- The Bank of Canada raised its target for the overnight rate to
2.5 per cent this month and has also indicated that interest rates will need to rise further to get inflation under control. Many Canadians will feel the effect of these interest rate hikes and will look to spend less in the months to come.