Bank of Canada Survey Shows Elevated Consumer Inflation Expectations

The Bank of Canada's second-quarter 2026 Survey of Consumer Expectations found that Canadians' near-term inflation expectations remain elevated, weighed down by ongoing trade tensions and rising concerns about oil and energy prices linked to the war in the Middle East. The survey's sentiment indicator stayed low, with consumers continuing to view the economic environment as challenging, and high prices and economic uncertainty weighing on household spending plans, particularly among those who expect the conflict to significantly raise inflation. At the same time, perceptions of the labour market improved modestly as fears of job loss eased, especially in sectors sensitive to trade. The findings come as the central bank has held its policy rate at 2.25%, balancing the risk of persistent inflation against signs of caution among households and businesses. Elevated inflation expectations matter to policymakers because they can become self-reinforcing, influencing wage demands and pricing behaviour, and making it harder to return inflation sustainably to target. The results suggest Canadian consumers remain wary, and that trade and energy developments will be key to how confidence and spending evolve in the months ahead.