Consumers Face Continued Price Pressure and Instability as Business Confidence Lags: Surveys

A view of the Bank of Canada building in Ottawa on May 8, 2025. Reuters/Blair Gable/File Photo

Consumers are still experiencing the burden of elevated prices and economic instability, and business confidence remains low, new reports from Canada’s central bank suggests.

Two reports issued by the Bank of Canada on Jan. 19 provide an overview of how companies and households perceived the economy during the fourth quarter of 2025.

Business leaders reported a decrease in tariff-related cost pressures from the previous quarter, although such pressures continue to be widespread, according to the central bank’s Q4 Business Outlook Survey.

“Businesses continue to cite uncertainty surrounding financial, economic and political conditions, slowing demand, and cost pressures as their most pressing concerns,” the report said. “Consistent with these ongoing concerns, sentiment remains subdued.”

The report indicated that companies experienced sluggish sales growth during the previous 12 months, with one-third saying they experienced a decrease in their sales volumes.

The report also found that the overall sentiment regarding future sales indicators has shifted positively, with 43 percent indicating they have observed an improvement compared to 12 months prior, in contrast to 30 percent who have noted a decline.

“Still, the balance remains below its historical average, suggesting only modest growth,” the report said. “While businesses continue to report negative effects — some coming directly from tariffs but even more coming indirectly from trade tensions — they do not expect these effects to worsen further.”

The Canadian Survey of Consumer Expectations found that plans for consumer spending also remain weak. High prices, economic uncertainty, and housing costs continue to be the primary factors limiting household expenditure.

When reflecting on international trade, participants who believed the most severe consequences had yet to occur were more negative about their financial well-being in the upcoming year.

Tariff Impact and Recession

Roughly the same number of businesses as last quarter reported being strongly impacted by U.S. trade policies, according to the report. They said they experienced weaker sales levels over the past 12 months.

Businesses that are impacted often also cite a downturn in domestic sales as a result of the widespread spillover effects stemming from tariffs and uncertainties related to trade.

This encompasses reduced business investment or the deferral of purchases due to ongoing trade uncertainties, lower orders from clients in sectors impacted by U.S. tariffs, and a bleak outlook among some enterprises that rely on household expenditure, including those in the housing industry, the report said.

Fewer businesses than last quarter said they were budgeting for a recession in Canada over the next 12 months. The rate dropped from 33 percent in the previous report to 22 percent currently.

The reports come ahead of the Bank of Canada’s next interest rate decision and monetary policy report expected on Jan. 28.

The business outlook survey is conducted four times each year through in-person, video, and phone interviews. The Canadian survey of consumer expectations was done through an online panel from Oct. 30 to Nov. 18, 2025, with follow‑up phone interviews from Nov. 21 to 27, 2025.

The Canadian Press contributed to this report.