The Canadian Survey of Consumer Expectations for the third quarter of 2024 indicates a decline in consumers' perceptions of current inflation and their expectations for future inflation. Although these expectations have decreased, they remain above pre-pandemic levels. The survey, conducted online from August 6 to 23, 2024, with follow-up phone interviews from September 3 to 12, highlights that strong government spending and high housing costs are seen as contributors to inflation.
Consumers report less financial stress due to recent interest rate cuts and lower inflation rates. However, there is an expectation that interest rates will stay elevated, impacting spending decisions. Perceptions of the labor market have weakened further, with wage growth expectations declining for the first time since mid-2023. Young consumers perceive a more significant deterioration than others.
Inflation expectations have eased across all time horizons. A rising share of consumers now expect inflation to be within the Bank of Canada's target range over the next year. Despite this optimism about future inflation control, consumer views on short-term price increases remain diverse.
Consumer sentiment has improved slightly but remains subdued compared to previous quarters. Fewer consumers expect their finances to worsen in the coming year, aligning with lower inflation and interest rate cuts by the Bank of Canada. Mortgage holders show increased optimism regarding mortgage renewals.
Nevertheless, high inflation and elevated interest rates continue to affect budgets negatively. Nearly half of respondents anticipate a recession in the coming year and plan to reduce spending while saving more.
Housing market indicators remain stable with no change in home-buying intentions compared to last quarter. Renters cite high rent prices and affordable mortgage rates as factors influencing their decision to buy homes.
Labour market perceptions indicate weaker conditions than in previous quarters. Wage growth expectations have softened for both public and private sector workers since late 2022. Youth face particular challenges in finding jobs and have adjusted their spending plans accordingly.
"The job market is definitely getting more competitive," said one young respondent during follow-up interviews.
The Canadian Survey of Consumer Expectations provides insights into respondents' views on various economic factors but does not necessarily reflect the opinions of the Bank of Canada itself.