What: Canadian consumer spending is rising, but much of the growth is being sustained by savings drawdowns, asset gains, and borrowing rather than income.

Why it is important: This development reinforces the need for retailers to stress-test demand, refine value propositions, and offer financing or pack-size options where appropriate.

BCG argues that Canadian consumer spending is sending a weaker signal than headline growth suggests. Real spending rose about 2% in Q1 2026 and per-capita spending has grown for six straight quarters, but outside the top 20% of earners, higher spending is not being funded by income. Services, including financial services linked to borrowing and asset-linked fees, are driving most growth, while essentials are flat and cars, furniture, and appliances are declining.
Between 2021 and 2025, income growth covered 106% of increased spending for the top 20%, but only 57 cents of every new dollar for the middle 60%, and almost none for the lowest 20%. Savings are weakening across the bottom 80%, while the middle 60% saw the fastest growth in liabilities, increasing exposure to debt-servicing costs. For business leaders, Canada no longer has one “average consumer.” Planning must reflect more value-seeking middle-income shoppers, greater sensitivity to credit conditions, and the need for financing, trade-in, deferred-payment, bulk, or larger-pack options where relevant.

IADS Notes: The BCG article’s warning that Canadian consumer spending growth no longer signals broad financial strength fits a wider pattern of value-seeking and consumer polarisation. In November 2025, BCG found that Canadian shoppers were already prioritising predictable value, quality, and trust over temporary promotions, reflecting household fragility beneath continued spending. BCG’s June 2026 European consumer analysis showed a similar shift toward discounts, essentials, and weaker brand loyalty as financial pressure intensified. AlixPartners’ December 2025 global outlook reinforced the point that persistent uncertainty is making consumers more cautious and pushing retailers toward agility, scenario planning, and operational discipline. BoF’s March 2026 coverage of the “e-shaped economy” adds a useful parallel, showing how upper-income consumers can sustain discretionary demand while middle- and lower-income households become more selective. Restaurant Dive’s March 2026 review of US retail receipts further supports the category implications, with essentials and experiences outperforming big-ticket and home-related purchases.

Canadian consumer spending is up, but the signal has changed