Canadian households pull back as spending slows in last half of 2025, RBC reports

“Solid consumer spending in July hit a bump in August. Total spending was down 2.2% month-to-month from July, reversing the previous month’s gain,” Rachel Battaglia, economist at RBC, said in the report.

Essentials take the biggest hit

The pullback was sharpest in everyday necessities. Gas station spending has continued to contract since the spring, and grocery bills have been essentially flat since May — not because prices have eased, but because households are likely buying less, switching brands or cutting extras to keep costs in check.

At the same time, discretionary categories show Canadians are still carving out room for selective purchases. Clothing sales picked up in August, and Battaglia noted that “spending on general merchandise, sporting goods, health and personal care, and building materials slightly offset weakness in other categories.”

Travel, however, dipped, suggesting bigger ticket leisure purchases are something many Canadians are choosing to postpone.

Regional differences reflect household strain

Spending patterns varied widely across the country. Saskatchewan and Manitoba saw some of the steepest declines — 1.3% and 1.1% respectively — based on RBC’s three-month rolling average. Families in those provinces may be feeling the pinch earlier, with tighter job markets or higher debt loads limiting spending.

By contrast, Atlantic Canada showed more resilience, and Ontario households kept spending relatively steady despite facing tougher labour signals and trade disruptions. For consumers, this divide highlights how local job conditions and costs of living are shaping household budgets as much as national trends.

What this means for households

Despite weaker numbers, overall consumer behaviour has held up more strongly than some economic indicators suggest. RBC still expects Canada’s economy to return to “slow, but positive” GDP growth after a Q2 dip, helped in part by resilient consumer spending.

For families, though, the report shows signs of an ongoing squeeze: necessities are where cuts are being made, while selective splurges in clothing or personal care continue. While economists might see a “mixed signal,” for households, the picture is clear — budgets remain under pressure, and the balancing act between cutting back and treating yourself is likely to define spending into the fall.