RBC card data showed household spending holding up even as pump prices climbed
Canadian households kept tapping their cards in March even as gasoline prices spiked, a trend that economists said underscored the resilience and limits of consumer demand as many borrowers headed into heavier mortgage-payment years.
In a new analysis of RBC cardholders, Abbey Xu, economist at RBC, said “Canadian cardholder spending firmed modestly in March with underlying activity continuing to stabilize despite ongoing softness in discretionary goods.”
The bank’s core retail sales measure “rose 0.3% on a three-month average from -0.1% (seasonally adjusted), extending the gradual improvement seen since the start of the year,” Xu said.
“Spending on gasoline surged 9.1% in March as conflict in the Middle East pushed oil prices higher,” Xu said, noting that the jump at the pumps also propped up essentials spending overall.
“Excluding gasoline, spending still rose in March, but slowed from February, remaining weak on a three-month average.”
Experience spending leads, goods lag
Consumers were still willing to pay for experiences, even as goods purchases stayed under pressure.
“Service categories remained the primary source of non-gasoline related growth with entertainment and arts leading gains, reinforcing the ongoing shift toward experience-related spending,” Xu said.
By contrast, “clothing and related retail segments continued to contract on a three-month average, largely reflecting a pullback in January with spending firmer in the following two months,” Xu said.
Provincial patterns were uneven: “Declines persisted in British Columbia and New Brunswick, while other regions, including Quebec and Ontario, showed modest gains or stabilization,” she said.
Meanwhile, consumer insolvencies climbed to their highest level since the global financial crisis, with a 4.8% year‑over‑year rise in Q3 2025 filings and more than 1.45 million households missing a credit payment in the quarter.
What it meant for the mortgage conversation
For now, softer inflation data has markets betting the Bank of Canada would move cautiously, even after shelter inflation eased and mortgage‑interest‑cost growth slowed from its peak.
RBC’s spending tracker suggested households still have some room to absorb higher fuel costs by trimming discretionary goods and leaning into services.
But with many borrowers facing renewals at higher rates through 2025 and 2026, a renewed run‑up in energy prices or a loss of momentum in services spending could quickly feed into arrears risk and refinancing stress.
Meanwhile, TD Economics’ latest card‑spending report showed that overall consumer outlays softened in January before stabilizing in February, with real spending in the first quarter tracking at about a 1.2% annualized pace.
However, the sharpest weakness sat in categories linked to homeownership and renovation, adding another headwind for brokers counting on a spring housing rebound.
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