Central Bank of Canada released its consumer survey on Monday, revealing that consumers anticipate the ongoing global conflict to boost the economy and raise prices. The survey was conducted between the first and fifth week of February, prior to the conflict’s commencement. Follow-up telephone interviews took place between the 24th of February and the 2nd of March. A separate survey focusing on conflict-related issues was conducted between the 26th of March and the 2nd of April.
Consumer spending plans were put on hold prior to the conflict due to high prices and economic uncertainty. Trade disruptions have led to consumers being in a less favorable position compared to the previous quarter. The Consumer Confidence Index in Canada showed a slight increase from previous low levels. US trade policies had less impact on consumers. Persistent high living costs remain a significant concern. Consumers are focusing their spending on domestic goods and local vacations. They are spending less on US goods and travel.
Consumers continue to view the labor market as weak. Unemployment fears remain high. The likelihood of job loss increased marginally. This anxiety level is still below previous levels. Sectors with a high proportion of jobs that can be automated saw increased job loss concerns.
Pre-conflict short-term inflation expectations remained largely unchanged. The survey’s historical average is being maintained. Significant food price inflation expectations continue to be a major driver of long-term inflation expectations. Long-term inflation expectations have slightly decreased compared to 12 months ago.
The post-conflict survey provided significant insights. A large majority of respondents believe that the conflict will harm the Canadian economy and pave the way for higher inflation. Nearly one in five participants canceled or postponed their travel plans due to increased travel costs. Almost one in three adjusted or reduced their major expenses.
If the conflict continues, consumers are expecting significant price increases in fuel and food within the next 12 months.
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