Household spending stays strong into May
- Card transactions held firm at 30% above pre-COVID (2019) levels in April—with strong momentum carrying into May.
- High contact services spending is closing the gap with already strong goods purchases as shoppers opt for more visits to restaurants and hotels.
- Little evidence exists to suggest higher inflation is undermining spending momentum on essential items like groceries.
- But higher gas prices are exacting a hefty toll at the pump, particularly as Canadians travel more, and show a greater interest in cross-border travel.
- Canadian household spending remains elevated in April, climbing 30% above pre-COVID levels.
- Goods sales remained strong, driven by increases in clothing, furniture and grocery purchases.
- On the services side, spending on travel and hospitality continues to surge back as the economic impact of the pandemic subsides.
- Higher food prices have yet to curb consumer appetites for dining out. Both the number of transactions and amount spent on restaurants is up.
- Aggregate spending is powering into spring, holding ~ 30% above pre-shock (2019) levels—and more than 10 percentage points above January when Omicron restrictions weighed on activity.
- A global increase in oil prices pushed up the average sales amount at gas stations, but the broader lift in spending is not just a result of inflation. The number of transactions has also increased.
- Higher prices have pushed up ‘non-discretionary’ costs (food, shelter, gasoline, etc.), but discretionary travel and hospitality spending continues to strengthen.
- Travel spending surged back above pre-pandemic levels as more families invested in March Break holidays.
- Travel spending touched pre-COVID levels for the first time as pandemic restrictions eased.
- The domestic tourism recovery continues to outpace international travel but Canadian spending on restaurants and hotels abroad has also been rising.
- Spending on services overall continued to recover alongside another increase in purchases of physical merchandise.
- Surging prices and geopolitical uncertainty from the Russian invasion of Ukraine are headwinds for the economy. But firmer job markets, easing COVID-19 restrictions, and pent-up demand for travel/hospitality services are supporting strong near-term spending.
- Overall household spending quickly shook off the impact of the new COVID-19 variant and is now nearing pre-Omicron peak growth rates.
- Travel spending rebounded after plunging in December and January.
- Shopping at retail outlets built on late January momentum, and is tracking a gain in February.
- The reopening of indoor dining rooms in Quebec and Ontario (in time for Valentine’s Day) allowed a rapid bounce back in restaurant sales.
- The post-Omicron spending surge aligns with views that the macroeconomic impact of Omicron will be smaller and shorter-lived than previous waves, leaving the Bank of Canada free to begin hiking interest rates on March 2.
See the archived COVID Consumer Spending Tracker here.
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