Total spending will be on the downswing once inflation pressures ease

  • Total cardholder spending remained 30% above pre-pandemic levels in July but has edged lower so far in August.
  • Average spending (per visit) at gasoline stations dipped on lower prices – total spending on gasoline still below pre-pandemic levels controlling for price increases.
  • Total restaurant sales flattened in July, with the number of transactions down 3.5% this past month.
  • Canadians are making more grocery store purchases. Compared to 2019, grocery transaction volumes trended higher in July (now 9.5% higher than 2019).
  • But our cardholder data has yet to show that Canadians facing soaring inflation are spending a greater share of their income on essentials. In fact, consistent with pre-pandemic levels, roughly one-third of total cardholder spending can be accounted for by spending on groceries, utilities, and communications.




 

  • Cardholder spending still running ~30% above pre-pandemic levels, but easing modestly in July
  • Both goods and services spending growth levelled off into July
  • Average transaction values at the pump have fallen 3.5% alongside a 9% drop in gasoline prices.
  • Both real (excluding price changes) and nominal restaurant spending has plateaued with higher prices accounting for roughly one-third of the increase in restaurant spending from pre-pandemic levels
  • Pent up travel demand persists as airports struggle with labour shortages





 

  • Total spending was flat in June, holding steady at 30% above pre-shock levels.
  • Canadians continue to spend more at the pump — on average $60 in June per transaction, up from $57 in May. All of this increase is due to rising prices.
  • Inflation is also responsible for one third of the growth in restaurant spending.
  • But Canadians continue to dine out more frequently—spending 30% above pre-pandemic levels—as growth in grocery store spending slows.
  • A surge in travel and hospitality purchases has yet to subside, even as goods spending flattens out.





 

  • Canadians are still buying more than they did before the pandemic—but early data suggests spending is plateauing.
  • After a steady climb, total cardholder spending remains 30% above pre-pandemic levels in June—the fourth consecutive month at this level.
  • Canadians continue to make more purchases at restaurants, despite higher prices.
  • But the recent surge in domestic travel spending shows signs of moderating.





 

  • Total card spending surged 32% above 2019 (pre-pandemic) levels in May.
  • Spending on goods has plateaued at high levels but demand for travel and hospitality services continues to soar.
  • Rising purchases at restaurants are not just a result of higher prices. The number of transactions is increasing too.
  • Spending on international travel rose 36% from pre-pandemic levels this month.
  • Average spending at the pump continued to trend higher through May.





 

  • Total card spending continues to run roughly 30% above 2019 (pre-pandemic) levels.
  • Advance bookings for travel are surging.
  • For the first time since the pandemic, spending on travel and hospitality is overtaking purchases of merchandise.
  • Average spending at the pump keeps climbing with surging gas prices.
  • Even as some pandemic habits fade, Canadians continue to buy more groceries online.





 

  • 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.





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See the archived COVID Consumer Spending Tracker here.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.