Nov 2, 2026
Following a mid-summer slowdown, Canadian consumer spending rebounded in August. Shoppers spent $74.6 billion at retailers in a single month — up 1.2% from July — and sales rose in every one of the nine store categories the federal government tracks.
It sounds like consumer confidence is back — until you look at the actual numbers. Drivers spent more at the pump while buying less fuel, and spending at health and personal care stores has climbed for 10 straight months.
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With inflation rising above 3% and the Bank of Canada scheduled to announce interest rates on Oct. 28, this fall is an ideal time to assess whether your household spending aligns with your budget or is beginning to exceed it.
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What pushed Canadians back into stores in August?
So then what’s behind the rebound? Car buyers led the surge. Sales at motor vehicle and parts dealers rose 1.2%, powered by a 1.5% jump at new car dealers, while used car dealers saw sales slip 0.5%.
And everyday spending picked up, too. Core retail sales, which exclude gas stations and auto dealers, rose 1.1%. Food and beverage sales snapped a two-month slide, posting their first gain in three months (up 1.1%), general merchandise stores rose 1% and health and personal care stores climbed 1.6%.
The gains were far from even. Ontario led with a 2.2% increase, including a 4% jump in the Toronto area, and British Columbia rose 2.1%. Sales dropped in Alberta and three Atlantic provinces.
Crucially, sales also rose 1.2% in volume terms. Canadians weren’t just paying more — they were actually buying more.
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Why are you paying more at the pump but getting less gas?
Here’s where the data hits closest to home. StatCan says sales at gas stations and fuel vendors rose 1.7% in August, yet fuel volumes fell 0.5%. Simply put, Canadians spent more on gas and drove away with less of it.
The latest inflation data explains why. StatCan’s Consumer Price Index (CPI) shows prices rose 3.1% year over year in September, up from 3% in August, with gasoline up 27.8% from a year earlier. Take out gas, and inflation was a milder 2.2%.
For long-distance commuters, rural households and anyone who drives for work, that gap matters. Grocery hikes have slowed, but fuel is taking a bigger bite out of household budgets.
Could strong spending keep borrowing costs high?
With spending rising and inflation above target, borrowers are left asking: is rate relief on the way? The Bank of Canada, the country’s central bank, has held its key policy rate at 2.25% since October 2025.
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September’s 3.1% inflation reading sits above the top of the bank’s 1% to 3% target range.
While the outcome of the Oct. 28 decision remains uncertain, stronger consumer spending and above-target inflation typically reduce the likelihood of an immediate interest rate cut. If you have a variable-rate mortgage, a home equity line of credit or a credit card balance, it’s safer to budget as though borrowing costs won’t fall any time soon.
That retail momentum may be slowing. Statistics Canada’s preliminary estimate indicates retail sales rose 0.7% in September, though the agency notes this figure is based on incomplete survey data and subject to revision before official results are released on Nov. 20.
What to do now
National spending numbers can’t tell you whether your household is on track, but your own statements can. Before holiday shopping ramps up, consider these steps:
- Stack your August and September spending on fuel, groceries, and pharmacy runs against your actual budget
- Set a firm holiday spending cap now, before Black Friday deals start pressuring your plan
- Pay off high-interest card balances before charging anything new
- If you have a variable-rate loan or a mortgage renewal coming up, calculate your payment if rates hold steady or rise
- rim fuel costs by bundling trips, carpooling and leveraging pump rewards
- Direct any savings into an emergency fund held in a high-interest savings account or Tax-Free Savings Account (TFSA)
The Financial Consumer Agency of Canada (FCAC), the federal agency that protects consumers of financial products and services, offers a free budget planner that can help you separate fixed costs from flexible ones.
Finally, keep one month of data in perspective. StatCan notes that seasonally adjusted figures are revised as new data arrives, and those revisions “could even lead to a reversal of movement.” Treat August’s rebound as a snapshot, not a trend — and let your bank statements dictate your holiday budget.
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Amy Tokic is an SEO content editor for Money.ca. She holds a B.A. in Communications from the University of Windsor. Amy is an award-winning author and has been writing professionally for 15 years, publishing articles in the lifestyle and health sectors.
