Holiday shopping has always been a mix of joy, tradition, and let’s be honest financial stress. But this year, the numbers tell a deeper story. Inflation, new tariffs, and a widening income gap are shaping how Canadians approach the festive season, and the result is a holiday economy split sharply down the middle.
A recent Harris Poll conducted for NerdWallet Canada shows that Canadians expect to spend an average of $708 on gifts this year, only a slight bump from last year’s $698. On the surface, that looks like stability. But scratch a little deeper and the picture becomes far more uneven.
Nearly one in four Canadians plans to spend over $1,000, while a much larger share 46% say they’ll spend less than $500. And for many, that’s not just a choice. It’s a necessity. With household costs rising faster than wages, a growing number of families are simply unable to keep up.
This divide isn’t random. It reflects exactly what retail analyst Bruce Winder describes as a “K-shaped” economy where the financial trajectories of Canadians are moving in opposite directions.
On the upper branch of the “K,” higher-income households continue to spend freely, even dipping into luxury markets as if inflation were merely background noise. Many have benefitted from strong stock market performance or pandemic-era career boosts. For them, holiday shopping looks much like it always has.
But the lower branch tells a different story one of tightening budgets, persistent debt, and tough choices. Statistics Canada has already confirmed the income gap reached a record high in early 2025, and it’s showing up clearly in spending behaviour.
According to the survey, 28% of Canadians are still paying off last year’s holiday debt. Millennials are carrying the heaviest load, with 30% still climbing out of their 2023 holiday bills. Even more concerning is that 22% of Gen Z shoppers expect to tap into their emergency savings just to buy gifts this year a troubling sign for the generation most affected by rising living costs.
So how are Canadians coping? By scaling back.
- 36% are buying gifts only on sale.
- 35% plan to spend less per person.
- 32% are giving gifts to fewer people altogether.
And they’re not alone. A Bank of Montreal survey earlier this month found that 61% of Canadians are adjusting their holiday spending due to tariffs, and nearly half are cutting back their gift budgets. Even the Bank of Canada has acknowledged this growing consumer caution.
The big picture? Holiday shopping in 2025 is no longer a simple matter of budgeting it’s a reflection of the country’s growing economic divide.
Some Canadians will enjoy their most lavish holiday season ever. Others will be choosing between gifts and groceries. That’s the uncomfortable truth behind this year’s spending data.
The holidays may be a time of giving, but our economic reality is giving us a message we can’t ignore: the “K-shaped” economy isn’t just a theory anymore. It’s here, it’s widening, and it’s shaping even our most cherished traditions.
