- In its latest consumer spending tracker report, Royal Bank of Canada (TSX:RY) stated the average number of grocery transactions was up 8.4 per cent last month, compared with a roughly 13 per cent bump relative to pre-pandemic levels seen toward the end of November 2022
- People are making fewer grocery store runs on average as food inflation persists, but still spending roughly the same amount per trip
- The report noted some signs of restaurant spending edging lower (excluding inflation), yet consumers continue to favour dining out
- The national unemployment rate held steady last month, according to data from Statistics Canada, with employment “little changed”
Even as higher interest rates and rising grocery inflation sapped spending power, Canadian discretionary spending held up through February.
In its latest consumer spending tracker report, Royal Bank of Canada (TSX:RY) stated the average number of grocery transactions was up 8.4 per cent last month, relative to pre-pandemic levels, compared with a roughly 13 per cent bump relative to pre-pandemic levels seen toward the end of November 2022.
However, people are making fewer grocery store runs on average as food inflation persists, but still spending roughly the same amount per trip.
The report noted some signs of restaurant spending edging lower (excluding inflation), yet consumers continue to favour dining out.
Air transportation costs also rose 28 per cent from pre-pandemic levels, but Canadians are still prioritizing travel and spending more on trips abroad than travelling domestically.
Source: Royal Bank of Canada.
This comes as the national unemployment rate held steady last month, according to data from Statistics Canada, with employment “little changed.”
The agency said employers added 22,000 jobs last month, and the unemployment rate was unchanged at 5.0 per cent, keeping just above record lows.
The private sector and full-time employment were where growth was largely concentrated.
Business, building, and support sectors saw declines in February, while health-care, public administration, and utility sectors saw boosts.
StatsCan said employment has been on an upward trend since last September, but February’s increase is a smaller step than the January and December job reports.
Despite indications that the country’s economy was slowing heading into 2023, Canada saw solid employment growth of 150,000 new jobs in January and 69,000 jobs in December.
In February, the gap between wage growth and inflation narrowed, with average hourly wages up 5.4 per cent compared with a year ago.
The Bank of Canada has raised concerns that sustained four to five per cent wage growth will make it more challenging to return to its two per cent inflation target. The Bank held its key interest rate steady at its latest interest rate announcement but flagged that the labour market is still too tight.
The central bank reaffirmed its conditional pause on rate hikes last week but didn’t deny future increases would be possible if data shows inflation is not slowing according to its forecast. Looking ahead, the labour market is expected to ease in the coming months as higher interest rates slow spending by people and businesses.