The Canadian Survey of Consumer Expectations for the second quarter of 2024 was conducted through an online panel from April 26 to May 15, with follow-up phone interviews taking place from May 14 to May 23. The survey results indicate that consumers' perceptions of inflation remain unchanged from the previous quarter, but their expectations for inflation over the next 12 months have declined significantly. Despite this improvement, both measures are still higher than pre-pandemic levels.
Most consumers attribute high inflation to domestic factors such as government spending and elevated housing costs. Sentiment remains subdued due to high inflation and interest rates constraining budgets. Financial stress is high, with many consumers reporting spending cuts and pessimism about future economic conditions. However, homebuying intentions are close to historical averages, driven by strong plans among newcomers.
Consumers' perceptions of the labor market have weakened, particularly among private sector employees. However, overall wage growth expectations reached a new survey high, driven by public sector employees anticipating salary adjustments in line with the higher cost of living.
Inflation expectations have eased but remain above pre-pandemic levels. Consumers cited food prices, gas prices, and interest rates as key factors influencing their views on inflation. In follow-up interviews, some noted price stability in certain products compared to previous months.
Consumer perceptions of current inflation continue to be higher than actual consumer price index inflation. Expectations for inflation over the next 12 months remain high due to domestic factors like government spending and housing costs. Fewer consumers expect these issues to resolve in the short term.
While perceptions of current and near-term inflation remain elevated, long-term expectations are broadly unchanged and anchored within the Bank of Canada's target range of 1%–3%. Canadians continue to feel negative impacts from elevated inflation and high interest rates on their financial situation.
Pessimism about financial situations is reflected in indicators of perceived financial stress, which increased slightly this quarter but remain below highs recorded in 2023. Job security perceptions deteriorated while concerns about missing debt payments rose among renters.
Interest rate expectations remain historically high despite recent policy changes by the Bank of Canada. Mortgage holders express confidence in coping with higher payments upon renewal but show concern closer to renewal dates.
Homebuying intentions are supported by improving affordability perceptions and rising rent prices making mortgage payments more attractive. Home price growth expectations increased for the second consecutive quarter.
Labour market perceptions have resumed deterioration after stabilizing last quarter. The probability of job loss is higher than previously reported, especially among newcomers. Conversely, wage growth expectations reached a survey high for the fourth consecutive quarter driven by public sector employees expecting wage adjustments through collective bargaining agreements.
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