Canadian Consumers Shift Spending Priorities Amid Economic Concerns
Canadian consumers have not reduced their overall spending despite economic challenges, but they are becoming significantly more cautious and selective with their money, according to new transaction data from Moneris Solutions. The payment processing company, which handles approximately one in three transactions across Canada, reports that total domestic spending remained essentially flat year over year during the first quarter of 2026, declining by only 0.27 percent. Meanwhile, the average transaction size increased slightly by 0.18 percent, indicating subtle shifts in purchasing behavior.
Economic Pessimism Drives Spending Reallocation
An Angus Reid survey commissioned by Moneris reveals that nearly half of Canadians believe the economy is currently struggling, with only 13 percent expecting improvement over the next six months. Compared to June 2025, these findings represent a 15-point increase in economic concern and a seven-point decline in optimism. Consequently, 43 percent of respondents indicated they plan to reduce spending on non-essential items, reflecting a pragmatic approach to financial management.
The data clearly shows consumers are still participating actively in the economy but are prioritizing essentials, value, quality, and discretionary experiences over less necessary purchases. This strategic reallocation is evident across various spending categories, with grocery purchases rising 2.6 percent year over year and spending at mass merchandisers like Walmart and Costco increasing by 6.9 percent. In contrast, department stores including Hudson’s Bay and Simons experienced an eight percent decline in purchases, while apparel and household spending each fell by two percent.
Entertainment and Travel Remain Resilient
Despite cutbacks in other areas, Canadians have not abandoned discretionary spending on entertainment and travel. Entertainment spending surged 11 percent over the past year, with the average transaction size jumping 17 percent, suggesting consumers continue to value experiences. Airline spending also increased by 11 percent, though with smaller average transaction sizes, potentially indicating shorter or more cost-conscious travel arrangements.
The data also highlights changing patterns in foreign spending that are altering how tourists experience Canada. Visitors are allocating more of their budgets to activities rather than accommodation, with entertainment spending by tourists rising 21 percent while hotel spending declined nine percent.
Regional Variations and Quarterly Trends
Regional spending trends displayed mixed results across the country. Alberta and Saskatchewan each reported 1.24 percent increases in total spending, while Quebec saw a more modest rise of 0.23 percent. Manitoba recorded the largest decline at 2.14 percent, followed by British Columbia at 0.86 percent and Ontario at 0.57 percent.
Moneris’s monthly data reveals a gradual improvement throughout the quarter. Domestic spending declined 2.35 percent in January, improved to a 0.63 percent decline in February, and turned positive in March with a 0.73 percent increase. This pattern suggests consumers are adapting their spending habits rather than withdrawing from the economy entirely.
Business Implications and Consumer Adaptation
Sean McCormick, vice-president of business development and data services at Moneris, emphasized that the broader picture is one of adjustment rather than withdrawal. "Businesses can adjust to a more cautious, pragmatic consumer by focusing on meaningful customer experiences that prioritize value and quality and reduce friction as much as possible," he stated.
The findings underscore a significant transformation in Canadian consumer behavior, where strategic spending decisions are replacing indiscriminate purchases. While overall expenditure remains stable, the reallocation toward essentials and value-oriented retailers, coupled with sustained investment in experiences, paints a nuanced picture of financial adaptation in challenging economic times.
