It’s tempting to blame a slow August on the end of summer or the usual back-to-school fatigue. But the latest numbers from the Royal Bank of Canada tell a bigger story: Canadians simply aren’t opening their wallets the way they used to—and no seasonal sale can hide it.
Yes, “core” retail sales everything except gas and vehicles nudged up a modest 0.4 per cent in August. But total spending actually fell 2.2 per cent. That’s a stark contrast to July’s healthier 1.1 per cent core growth. When the most reliable month for shopping fails to spark much activity, you know consumers are tightening their belts.
Clothing purchases were one of the few bright spots, but even travel spending ticked down. And gasoline purchases continue to contract, thanks in part to the elimination of the consumer carbon tax this spring. Economist Rachel Battaglia notes that the steady drop in fuel spending is now a key drag on overall trends.
Meanwhile, credit card usage a handy barometer for household confidence has slumped dramatically. According to J.D. Power, the average monthly credit card bill is down 17 per cent over the past two years, now sitting at about $1,336. Debit and cash spending have slid too.
This isn’t about shoppers being lazy or waiting for bigger discounts. It’s about households feeling squeezed. Higher borrowing costs, stubborn living expenses, and lingering economic uncertainty are making people think twice before tapping their cards.
For policymakers and retailers, the message is clear: Canadians are cautious for good reason. Lower interest rates might help over time, but until wage growth outpaces costs and consumers feel secure about the future, no amount of back-to-school promotions will get spending back to its old rhythm.
