The latest Canadian Survey of Consumer Expectations for the first quarter of 2024, released on April 1, 2024, provides valuable insights into consumer perceptions regarding inflation, the labor market, and household finances. According to the report, consumers believe that inflation has slowed, but their expectations for near-term inflation have not changed significantly.
Consumers' perceptions of inflation are closely tied to their own experiences with price changes for essential items like food and gas. The survey indicates that expectations for long-term inflation have increased, with many attributing high inflation to factors such as government spending and elevated home prices. One respondent highlighted the impact of interest rates on inflation by stating, "It’s interest rates that Canada is imposing on us. That, for me, contributes to inflation."
Despite feeling the negative impacts of inflation and high interest rates on their budgets, consumers are showing signs of improved sentiment. The report reveals that consumer sentiment has slightly improved, with fewer individuals feeling the need to cut or postpone spending. Additionally, perceptions of the labor market have stabilized, with workers remaining positive about employment prospects and anticipating stronger wage growth.
The survey also sheds light on consumers' coping mechanisms in the face of high inflation and interest rates. Many are adjusting their spending habits, such as limiting vehicle use, reducing restaurant expenditures, and shopping more strategically. While concerns about financial stress remain high, there are indications of slight improvement compared to previous quarters.
Furthermore, the report highlights changes in consumer spending plans, with fewer consumers planning to decrease spending and save more due to expectations for inflation and interest rates. Despite ongoing concerns about high mortgage costs and other barriers to home ownership, intentions to buy a home have increased. Workers' wage growth expectations have also reached a survey high of 2.8%, with the cost of living remaining a crucial factor in their considerations.
In conclusion, the Canadian Survey of Consumer Expectations provides valuable insights into consumer sentiment, inflation expectations, and labor market perceptions. The data reflects a nuanced understanding of the challenges and opportunities facing Canadian consumers in the current economic landscape.