Conference Board of Canada: Consumer Spending Drops Post Holiday Season
The Conference Board of Canada announced last week that the Index of Consumer Spending (ICS) has dropped 18.2 points from an average of 114.3 points in December to 96.1 points in January. This is not unusual as wallets tend to tighten during the first few months after the holiday season.
In January, the ICS clocked in at 96.1 points, dipping from previous months but still better than the 83.0 points it hit the same time last year. This tells us that while spending might be down, people are feeling a bit more upbeat about their money situation compared to last year.
Where Does Inflation Come Into Play?
Now, let's talk numbers. Inflation took a slight dip to 2.9% in January from 3.4% in December. This means things aren't getting pricier as fast as before. It's predicted that the Bank of Canada might start cutting interest rates as inflation cools off. Lower interest rates mean folks might be more inclined to open up their wallets and spend a bit more in the coming months heading into Spring and Summer.
The Conference Board of Canada forecasts the first interest rate cut by the Bank of Canada in June, with more cuts to follow throughout 2024 and into the next year. With interest rates dropping and people feeling a bit more financially secure, we can expect spending to pick up steam.
Keeping on top of consumer spending as well as projected rising and lowering inflation rates will help business owners and stakeholders alike navigate the post-holiday slump, positioning themselves for success in an ever-changing economic landscape.
Find the full report & graphic HERE.
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