The back-to-school season failed to lift Canadian consumer spending. New data shows a decline in household activity in August, with both RBC and J.D. Power pointing to weaker credit card use, reduced fuel spending, and softer demand across many categories.
RBC Data: Spending Down in August
The Royal Bank of Canada reported overall consumer spending fell 2.2% in August compared with July.
Core retail sales, which exclude vehicles and gasoline, rose 0.4%, but growth slowed compared with July’s 1.1% increase.
RBC economist Rachel Battaglia said the elimination of the federal carbon tax earlier this year continues to impact fuel purchases:
“The ongoing contraction in gasoline spending has been a significant driver of this trend.”
Shifts in Spending Categories
Clothing purchases rose, supported by back-to-school demand.
Travel spending dipped 0.1% on a three-month average.
Most other categories showed growth but at a slower pace than earlier in the summer.
Canadians Cutting Credit Card Use
A separate report from J.D. Power found Canadian monthly credit card spending has dropped 17% since 2023, averaging $1,336 in 2025.
The decline is not limited to credit cards. Canadians are also spending less with debit and cash, reflecting tighter household budgets and economic pressure.
Broader Consumer Trends
Economists say the data shows households are focusing on essential purchases while reducing discretionary spending.
The pullback signals that weaker consumer demand could weigh on Canada’s economic growth in the coming months.
