Canada’s inflation rate accelerated to 2.4 per cent in March, up from 1.8 per cent in February, as gasoline prices spiked because of oil supply disruptions in the ongoing Iran war.

Gas prices rose more than 21 per cent in March from the month before — “the largest price increase for gasoline on record, due to the supply shock resulting from the conflict in the Middle East,” Statistics Canada said Monday.

Overall, energy prices rose 3.9 per cent in March after falling 9.3 per cent in February.

Statistics Canada noted that gasoline prices in March 2025 still included the consumer carbon tax, which was removed in April 2025.

With that levy gone, “the impact of energy on inflation is set to get much larger in next month’s data,” said Leslie Preston, managing director and senior economist at Toronto-Dominion Bank.

Preston said in a note that while oil prices have dropped in recent days, they are still almost 40 per cent higher than a year ago.

“That means energy prices are likely to keep headline inflation elevated for some time,” she said. “April’s inflation reading is likely to head much higher as the dampening effect of the removal of the consumer carbon levy falls out of the year-on-year inflation calculation.”

Excluding gasoline, the consumer price index (CPI) rose 2.2 per cent in March.

Prices for food purchased in stores rose 4.4 per cent, up from 4.1 per cent in February. Prices for fresh vegetables rose 7.8 per cent, the biggest increase since August 2023. Price growth for cucumbers, peppers and celery was also notable, the agency said, due in part to “tighter supplies related to adverse growing conditions in producing countries.”

Lingering effects of the end of GST/HST holiday last year slowed inflation on some goods. Prices for restaurant food increased 3.2 per cent in March, down from a 7.8 per cent pace in February. Prices for alcoholic beverages purchased from stores, as well as toys, games (excluding video games) and hobby supplies also grew at a slower pace.

Andrew Grantham, executive director and senior economist at Canadian Imperial Bank of Commerce, said in a note that so far there is only a “limited sign” of higher gas prices passing through to other areas.

He said core inflation was “tamer than expected” in March, with four measures (CPI-trim, CPI-median, CPI-X and CPI excluding food and energy) averaging 1.4 per cent on a three-month annualized basis.

Economists expect higher gasoline prices will cause headline inflation to further accelerate to around three per cent in April.

Grantham said inflation will “hopefully” ease back slightly in May, partly due to the removal of the federal fuel excise tax that came into effect on Monday.

“Pass-through from higher energy prices into core measures of inflation may become more evident closer to the summer months, particularly as higher air fares are picked up more fully, but slack within the Canadian economy should prevent those measures from reaccelerating too much, enabling the Bank of Canada to remain on the sidelines through 2026,” Grantham said.

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Markets are paring back their bets for a rate hike after the consumer price index (CPI) accelerated to 2.4 per cent year over year in March from 1.8 per cent in February, mostly on higher gasoline prices.

Inflation came in lower than the 2.6 per cent economists were expecting despite gasoline prices jumping 21 per cent from February.

Bets for rate hikes in Canada rose when the United States and Israel initially attacked Iran on Feb. 28 to at least two 25-basis-point hikes in 2026 due to fears that inflation was headed for a post-pandemic repeat. However, bets have since receded and were wavering between one 25-basis-point hike this year and less than one hike.

Here’s what economists think the inflation data means for the Bank of Canada as it considers its next rate announcement on April 29.

‘Pain points’: BMO

“Core (inflation) was milder than expected, helping hold the overall inflation rate a bit below consensus expectations,” Douglas Porter, chief economist at Bank of Montreal , said in a note.

He said the Bank of Canada’s preferred measures of core CPI median and trim, respectively, held “steady” at 2.3 per cent year over year and slowed to 2.2 per cent. A measure of inflation that strips out food and energy was a bit less than two per cent.

But inflation boosters and subtractors were “lopsided,” Porter said.

The five biggest gainers fell victim to higher energy prices, including gasoline, travel tours, airfares, fuel oil and fuel for RVs. Drags on inflation included telephone services, auto insurance, furniture, candy and mortgage interest costs.

“Having said that, two of the pain points for consumers were not great, as grocery prices picked up a bit again,” he said.

Groceries accelerated to 4.4 per cent year over year from 4.1 per cent, while rent increased to 4.2 per cent from 3.9 per cent.

Porter expects inflation in April to jump above three per cent, with gasoline prices posting a seven per cent increase despite the elimination of the federal excise tax, which went into effect on Monday and is expected to shave 10 cents off per litre at the pumps. Also, the carbon tax was dropped last April and that will boost inflation.

“Our considered view is that if it were not for the conflict with Iran, the discussion would currently be revolving around the strong possibility of Bank of Canada rate cuts, not hikes,” he said. “This report reinforces that opinion.”

‘Light is green’: Rosenberg Research

“Tiff Macklem can hum and haw all he wants about his own personal inflation fears, but as the Bank of Canada fiddles, the economy burns ,” David Rosenberg, president of Rosenberg Research & Associates Inc. , said in a note.

The CPI rose 0.9 per cent month over month, falling short of the average estimate of 1.1 per cent. Seasonally adjusted, he said inflation was “flat as an ice hockey surface” and has been for the past three months.

Key for Rosenberg is the traditional core inflation measure, which excludes food and energy. It came in at 1.9 per cent year over year, which is less than the Bank of Canada’s inflation target of two per cent.

Another key was decelerating housing inflation, which slowed “on a seasonally smoothed basis” to 0.7 per cent year over year — a 12-year low — from 3.8 per cent.

He said the economy is suffering from an output gap and a weak labour market that hasn’t produced any net full-time positions since mid-2025.

“The light is green for the Bank of Canada to resume its easing cycle once the U.S.-Iran war finally does end, and a red light has now been established for any policy tightening, which the bond market had recently and we believe mistakenly started to price in weeks ago,” he said.

‘Weighed down’: KPMG

“The echoes of the current commodity price squeeze are still yet to be felt,” Ali Jaffery, chief economist at KPMG Canada , said in a note. “The pass-through of higher commodity prices and further supply disruptions into core inflation will pick up over the coming months, although how much will depend on the intensity and duration of the current conflict.”

He said conditions were very different the last time Canada suffered a severe inflation spike, and they included supply chain snarls, a major boost to government spending and an oil shock from Russia’s war against Ukraine. That forced central banks to hike interest rates to cool inflation.

This time, oil prices are feeding into a sluggish Canadian economy that Jaffery said is being “weighed down” by U.S. tariffs and slowing population growth. Also, inflation is sitting “roughly” at the Bank of Canada’s two per cent target.

“In that context, our expectation is that the pass-through of higher commodity prices into underlying inflation in Canada will likely be modest, assuming the conflict winds down soon,” he said.

Jaffery expects businesses will absorb any cost increases due to energy prices to protect market share and that should help guard against rising inflation expectations, which the Bank of Canada will be on the lookout for.

He also doesn’t expect inflation to enter the range of four per cent to six per cent, which would push up businesses’ inflation expectations.

KPMG is looking for the Bank of Canada to keep rates on hold for the rest of the year, assuming the Middle East conflict winds down in the next few weeks.

• Email: gmvsuhanic@postmedia.com

• Canada's inflation rate jumps to 2.4%, fuelled by gas price shock
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The Bank of Canada has named a pair of deputy governors to its inner circle, as it weighs economic policy in challenging times.

Marc-André Gosselin and Nicolas Vincent will begin their appointments effective May 25 and Aug. 3, respectively.

Gosselin, who’s held various roles with the central bank since 1999, will join the Bank of Canada’s governing council, responsible for monetary policy and financial stability.

“(Gosselin’s) breadth of experience across both monetary policy and financial stability, and his deep modelling and analytical expertise will be an important asset to Governing Council as our country adjusts to a changing economic landscape,” Bank of Canada governor Tiff Macklem said in a statement.

Vincent has been a part of the governing council since 2023 as an external deputy governor, but will now take a full-time role. He is in charge of international economic developments and will serve as the Bank’s deputy in the G7 and G20.

The bank is now in the process of filling Vincent’s external deputy position.

The Bank of Canada’ next interest rate decision is scheduled for April 29.

• Email: bcousins@postmedia.com

• Latest inflation data reinforce rate cuts would be on the table if not for Iran, says economist
• Canada's inflation rate jumps to 2.4%, fuelled by gas price shock

Canadian home prices have been grinding lower in this country for four years now since the heady days of the pandemic boom — and March brought no reprieve.

Sales in what normally marks the beginning of the busiest real estate season were the weakest in 17 years, and prices slipped another 0.4 per cent from the month before, said Robert Hogue, assistant chief economist at Royal Bank of Canada .

“The national composite MLS Home Price Index remains firmly on a four year-long decline, down 4.7 per cent from a year ago and 20 per cent from the cyclical peak in early-2022,” he said in a report after national housing data was released last week.

Economic uncertainty from Trump’s trade war and geopolitical conflicts has been keeping buyers back for some time, but now higher mortgage rates are adding a further disincentive.

Fixed rates have been rising as the spike in oil prices from the Iran war push up government bond yields and this recent rebound in borrowing costs suggest home prices will fall further in coming months, said Bradley Saunders, North America economist for Capital Economics.

“Things are likely to get worse before they get better,” he said.

The rise in government bond yields has pushed the average five-year fixed mortgage rate above 4 per cent and further gains are possible, he said.

Rebounding rates led the Canadian Real Estate Association to downgrade its sales and price forecast this past week. It now expects home sales to rise just one per cent in 2026, down from its January forecast of 5.1 per cent.

The national average home price forecast was lowered to $688,955, compared with $698,881 projected in January.

Ontario and British Columbia continue to suffer the worst of the correction. The home price index is down 7.4 per cent from a year ago in the Greater Toronto Area and down 6.8 per cent in Vancouver, said Hogue’s report.

And declines are not limited to these major markets. In Kitchener-Waterloo prices are down 8.6 per cent, in Barrie 8.4 per cent and London, 7.1 per cent. In B.C.’s Fraser Valley prices are off 7.5 per cent. Almost all of these markets saw further monthly declines in March, said Hogue.

Alberta has not been spared. The home price index is down almost 3 per cent in both Edmonton and Calgary.

Prices are rising in some markets where supply is tighter. Prices gained more than 10 per cent in Quebec City, 11 per cent in Moncton and over 9 per cent in Newfoundland and Labrador.

Hogue says there’s still hope of recovery if lower prices lure more buyers and inventory shrinks.

But there’s also a growing risk that global conflicts, high energy prices and fragile job markets prolong the slump, he said.

Spring is traditionally the busiest time for real estate and this year, the stakes couldn’t be higher. Follow our Spring Real Estate Survival Guide series as we unpack some of the most pressing questions buyers and sellers are grappling with, plus expert advice on how to navigate the reality of a slower market. Read the series here

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Economies might have recovered from the COVID-19 pandemic, but fiscal positions have not, says the International Monetary Fund. In fact, in many countries public finances are weaker than before the pandemic.

Despite robust global growth in 2025, governments made little progress on repairing budgets battered by the pandemic, the following inflation spike and trade disruptions.

Now soaring energy and food prices, tighter financial conditions, and heightened uncertainty arising from the Middle East war are once again prompting calls for fiscal support. And public finances are already strained.

“The numbers are stark,” said the IMF. Gross public debt has hit 94 per cent of gross domestic product and is projected to reach 100 per cent by 2029 — a year earlier than predicted.

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• Today’s Data: Canada inflation for March
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It’s been a wild ride for investors in 2026, but despite a war and oil crisis, the S&P 500 index is still up about two per cent for the year so far. Investing pro Peter Hodson offers five market strategies to consider during these uncertain — yet currently profitable — times. Read more

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at  posthaste@postmedia.com .

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Economists are expecting the high price of gas to “shock” the consumer price index (CPI) when Statistics Canada releases its March inflation report on Monday.

Gas prices spiked 21 per cent between February and March as the war in Iran and resulting near-closure of the Strait of Hormuz reduced the flow of oil from the Middle East and pushed up global energy prices .

The month over month price jump for gas is the highest on record for data dating back to 1950 and tops the 17 per cent rebound from pandemic-era lows between April and May 2020, said Douglas Porter, chief economist and managing director at Bank of Montreal (BMO).

“Even during Russia’s invasion of Ukraine, we never had a month that was (higher than) a 12 per cent increase,” he said. “So that is going to be a bit of a shock in next week’s CPI.”

Canada’s headline inflation rate rose 1.8 per cent on a year-over-year basis in February. BMO forecasts it will come in at 2.6 per cent in March and above three per cent in April.

Porter said the federal government temporarily suspending the fuel excise tax on gasoline starting April 20 is a “big step in the right direction,” but the savings of 10 cents per litre will only counter a portion of the run-up and that relief could be wiped out if prices rise further.

Energy costs are just one factor that affects grocery bills, but Porter said the energy price spike does threaten some of the “modest progress” on grocery inflation seen in recent months.

“At this point, we’re expecting food prices  on average to rise a little bit more than four per cent this year,” said Porter. “I think the risk is somewhat to the high side of that call.”

Food would be among the first items affected by sustained high oil prices, said Nathan Janzen, assistant chief economist at Royal Bank of Canada (RBC). However, he said it would happen over a period of months, not weeks, as businesses are typically hesitant to pass on price increases to their customers until they need to.

RBC expects inflation to come in at 2.5 per cent in March and above three per cent in April.

Janzen said food price growth as measured in the CPI will probably slow in March due to distortions from last year’s GST/HST holiday, which removed the federal portion of sales tax on specific items between Dec. 14, 2024, and Feb. 15, 2025, including restaurant meals and certain grocery products.

However, Janzen noted that grocery prices have already been running above the broader rate of inflation for some time. Last month, Statistics Canada said grocery prices have climbed 30 per cent over the last five years.

“The longer this conflict drags on, the more risk you have of adding to that,” said Janzen. “Even if you’re just marginally adding to food price growth, it’s adding to prices that are still growing pretty rapidly.”

Overall, economists don’t expect to see the same widespread inflation that resulted from the commodity shock after Russia invaded Ukraine in 2022.

National Bank of Canada senior economist Alexandra Ducharme said while the impact of high energy prices could spill over into core measures in the second half of 2026, the bank currently expects inflation to be “contained” because the rest of the economy isn’t doing well.

“The latest jobs data was not stellar. We’re seeing a weak housing market, moderate credit growth and households are still facing a mortgage repayment shock,” she said. “We’re not seeing inflation pressures really building up in the economy right now.”

National Bank of Canada expects inflation to hit 2.6 per cent in March and 3.2 per cent in April.

BMO, RBC and National Bank all predict the Bank of Canada will look past the temporary inflation pressure and maintain its benchmark interest rate at 2.25 per cent at its next announcement on April 29. They also expect rates to remain unchanged for the rest of 2026.

Porter said the central bank will be “gritting their teeth through the entire year” as it deals with the soft housing market and uncertainty around the upcoming review of the Canada-United States-Mexico Agreement.

Janzen said the oil price shock is reducing consumers’ purchasing power, which has a significant impact on lower income households.

“If you’re hiking rates in that environment, you’re really just adding to those challenges that are already building in the economy.”

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• Canada's inflation rate cools more than expected

• Email: jswitzer@postmedia.com

Bank of Canada governor Tiff Macklem says that he has been in touch with United States Federal Reserve chairman Jerome Powell to discuss the risks posed by Anthropic PBC ‘s latest artificial intelligence model, Mythos, which has the power to amp up the speed and precision of cyber attacks by quickly identifying and exploiting vulnerabilities and has been flagged as a potential risk to financial stability.

Their discussions have been among a series of high-level communications between Canadian and U.S. officials on the topic, Macklem said Friday during a news conference from Washington, where he is attending meetings of the International Monetary Fund.

“The Minister of Finance has been talking to Secretary of the Treasury in the U.S. about the U.S. approach,” Macklem said. “I also spoke to chairman Powell … and I expect those conversations will be ongoing in terms of the substance of the issue.”

As Canada grapples with who should take the lead on cybersecurity and national security risks posed by the new technology, Macklem said the Canadian Financial Sector Resiliency Group, which is chaired by the Bank of Canada, has met twice this month, most recently a couple of days ago. Members include the Office of the Superintendent of Financial Institutions (OSFI), the Finance Department, the Canadian Centre for Cyber Security and technology experts from the big banks.  

The group was designed to deal with the risks posed by new technologies, Macklem said, but he added that it is too early to say how this particular threat will be handled.

“It’s early days, and I don’t think anybody knows the full implications at this point,” he said. “The good thing about this group is they are the experts and there are confidentiality agreements which allow sharing of information to the people who need it.”

Sources in Canada’s financial sector say government officials are keen for the Bank of Canada, which oversees the payments system, and OSFI, which oversees the banks, to take the lead on a response.

Macklem said the Bank of Canada’s primary role is to protect the central bank from any potential detrimental impacts of AI and to ensure the integrity of Canada’s payments system. But he acknowledged the broader risks to the financial system and the bank’s central role in the financial sector resiliency group.

“It’s critical that our systems are protected,” he said, adding that he is talking to François-Philippe Champagne, the minister of finance, about Mythos and AI generally.

“The world’s moving quickly; we need to keep up.… So those conversations are happening.”

Macklem said he was not able to say whether any Canadian companies or institutions have been given a preview of Mythos, a courtesy that has been afforded to some companies in the U.S., including JPMorgan Chase & Co.

“I don’t have a lot of specifics for you…. A number of large companies in the U.S. that have signed agreements do have access to it,” he said. “These are large technology companies, mostly.”

Macklem said AI risks and responses were discussed among international representatives at the IMF meetings, and he expressed relief that the framing, for now, is hypotheticals rather than an actual AI-driven cyber attack.

“New AI large language models in general … can expose the vulnerabilities much faster and exploit them much faster,” he said. “And that really puts a premium on having a mature cybersecurity posture.”

• Global financial watchdog to share insights on Anthropic's Mythos, says Tiff Macklem
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• Email: bshecter@nationalpost.com

Starting Monday, businesses hit with illegal tariffs imposed by the Trump administration and subsequently struck down by the United States Supreme Court will be able to apply for their money back.

U.S. Customs and Border Protection (CBP) is launching a new portal, called Consolidated Administration and Processing of Entries (CAPE), through which importers of record and customs brokers can apply for refunds.

On Feb. 20, the U.S. Supreme Court ruled that President Donald Trump exceeded his authority by invoking the International Emergency Economic Powers Act (IEEPA) to justify imposing tariffs on Canada and dozens of other countries.

As of March 4, CBP had collected approximately US$166 billion in IEEPA tariffs paid by 330,000 importers across 53 million customs entries, according to filings with the U.S. Court of International Trade.

The agency said in a filing on April 14 that up to 82 per cent of customs entries with IEEPA duty payments, worth US$127 billion, are eligible to receive refunds electronically.

“CAPE is designed to consolidate refunds of IEEPA duties, including interest, rather than processing refunds on an entry-by-entry basis,” CBP said on its website. “CBP plans to implement CAPE through a phased development approach, adding more functionality in subsequent phases for more complicated scenarios.”

The first phase will accept requests for refunds on liquidated customs entries that have been finalized within the last 80 days and on unliquidated entries that are still open and under review.

CBP said more than 56,400 importers have registered to receive refunds as of April 9.

Jesse Mitchell, director of business development for customs brokerage Strader-Ferris International, estimates that at least 200 of his firm’s Canadian client companies will be filing for IEEPA tariff refunds and are eager to start the process of recouping their money.

Mitchell said while the filing process looks relatively straightforward, it will generally be easier for U.S.-based companies that have American bank accounts, which is a requirement to receive refunds through CAPE.

Canadian companies often act as the importer of record on U.S.-bound shipments and pay all customs and duties to make it easier for American customers to buy their products, Mitchell said. Many work with U.S. customs brokerages to manage the clearance process on their behalf, which can include handling the payment of U.S. duties, tariffs and taxes.

Mitchell said Canadian companies will need to get a U.S. bank account or work with their customs brokerage to get their refund. The process will also be more complicated for businesses that work with multiple brokerages to handle different types of shipments.

“If they have a lot of volume, that’s a lot of tariffs that could have been paid by each of those companies,” said Mitchell. “Coordinating the refunds between all the companies, if they need to use the brokers to file, will take time.”

CBP said that once a claim is approved, refunds will generally be issued within 60 to 90 days.

While there’s more work ahead for Canadian companies and customs brokerages, Mitchell said the new portal is good news for businesses that paid IEEPA tariffs.

“It seems like things are moving in a very positive direction, and the money is going to start flowing out to companies very soon,” he said.

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• The United States is losing its grip on Canada's steel market

• Email: jswitzer@postmedia.com

Canadians manufacturers of products ranging from sport and all-terrain vehicles to tools and moulds to transport trailers could be forced to curtail production after a tariff change imposed by the United States dramatically increased the cost of exporting their products.

The plight of Quebec-based Sea-Doo maker BRP Inc. , which announced this week that its tariff costs would shoot up by more than $500 million this year, drew attention to the little noticed change that went into effect April 6.

“The size of the cost impact fundamentally changes the profitability profile for BRP and injects a high degree of uncertainty into the outlook,” Cameron Doerksen, an analyst at National Bank Financial, wrote in a note to clients, slashing his target price for BRP stock to $80 from $125. BRP’s shares finished the week down 24 per cent after the company’s announcement, which included suspending its financial guidance for the year.

The U.S. modification to an earlier tariff on Canadian steel and aluminum means the entire value of products made primarily of those metals are now subject to the levies, rather than just the value of the steel and aluminum parts. While the levy is lower — 25 per cent instead of 50 per cent — it is calculated on the total value of the product, which means the exports cost substantially more.

The change casts doubt on the viability of hundreds of millions of dollars in revenue for exporters of transportation equipment such as trailers, said Jean-Marc Picard, general Manager of the Canadian Transportation Equipment Association.

“The impacts are massive. The latest tariffs are basically preventing some large Canadian companies from shipping (and) selling to the U.S. going forward,” he said. “Orders are being cancelled and production is curtailed in some cases and jobs are impacted.”

Picard said some manufacturers are continuing to ship to U.S. because of contract obligations, but their profits will disappear.

“The trailer manufacturers are impacted the most and then you have all the suppliers impacted as well,” he said, adding that this pushes the revenue at risk far higher than the $500 million he estimates for the manufacturers in his association. “Axles, suspensions, lights, metals … the list is long.”

Picard said there doesn’t appear to be an appetite in Ottawa to impose reciprocal tariffs, so U.S.-made trailers continue to ship freely to Canada.    

“They ship over $1 billion in van trailers per year,” he said. “Not only we are unable to ship to U.S. because the numbers don’t work but the U.S. is also eating our lunch in Canada. This has to stop.”

Dennis Darby, chief executive of Canadian Manufacturers and Exporters (CME), said hundreds of companies across Canada are affected, and the new tariff regime is hardest on the small and medium-sized businesses in his association, which rely on U.S. buyers and have little recourse.  

Some companies may qualify for federal government programs set up to support large steel and aluminum companies hit by tariffs, he said, adding that his organization is lobbying to ensure aid remains in place and that the latest escalation is addressed in upcoming Canada-U.S.-Mexico Agreement negotiations.

If that doesn’t happen, manufacturers may have no choice but to relocate production to the U.S., he said.

“We polled our members even six months ago, and somewhere in the range of 40 per cent were at least looking at what it would take to … move some production to the U.S.,” he said. “I think that if this persists, if we aren’t able to provide some clarity or hope to Canadian companies through the CUSMA negotiation … you will, over time, see companies pivoting their production where they can to the U.S.”

Darby said many affected companies, which stretch from British Columbia to Nova Scotia, were reluctant to go public with their concerns, at least for now. But BRP is a member and the calls his organization has received from hundreds of other businesses suggests the latest tariff jolt will eat into revenue and profits, hamper investment and hurt productivity.

“What’s happened is people are sitting on their hands because of the uncertainty, and that’s what continues right now. That’s the worst of all worlds,” he said.

William Pellerin, a partner in the international trade group at McMillan LLP, said companies that are affected by the latest change — including tool and mould makers and manufacturers of tractor trailers and ATVs — cannot seek protection via CUSMA exemptions because they don’t apply to steel derivative tariffs imposed by the United States.

“ Other than taking on a ton more debt, there is not much these companies can do, or that government can do, other than attempt to negotiate away these U.S. tariffs,” he said.

“ Absent some negotiated outcome, the result is likely to be that many of these companies will relocate operations to the United States or retrench operations and lay off workers.”

Pellerin said the latest change marks a significant escalation in the trade war, and is extremely painful for Canadian manufacturers.

“We have seen Canadian manufacturers make the difficult decision to cease all  exports to the United States – sales are drying up,” he said.

• Companies hit with Trump's illegal tariffs can apply for refunds starting next week
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• Email: bshecter@nationalpost.com

Canadian consumers have not reduced their spending in the face of a struggling economy, but they are are being more cautious and selective with their money, according to new transaction data from Moneris Solutions.

The payment processing company, which handles roughly one in three transactions in Canada, said total domestic spending was essentially flat year over year in the first quarter of 2026, down only 0.27 per cent, while the average transaction size rose 0.18 per cent.

The data suggest consumers are still participating in the economy but are becoming more selective about what they buy, prioritizing essentials, value, quality and discretionary experiences.

An Angus Reid survey commissioned by Moneris said nearly half of Canadians believe the economy is struggling, and only 13 per cent expect to see improvement over the next six months. Compared with June 2025, the findings mark a 15-point rise in economic concern and seven-point drop in optimism, the company said.

Meanwhile, 43 per cent of respondents said they expect to reduce spending on non-essential items.

While overall spending remains stable, a closer look at spending by category shows a clear reallocation of consumer dollars.

Grocery purchases rose 2.6 per cent year over year, while spending at mass merchandisers such as Walmart and Costco increased 6.9 per cent. Department stores, including Hudson’s Bay and Simons, saw purchases fall eight per cent, while apparel and household spending each declined two per cent.

This suggests Canadians are prioritizing essential and affordable retail items while pulling back from more discretionary purchases.

One type of discretionary spending Canadians have not given up on is entertainment.

Entertainment spending rose 11 per cent in the past year, with average transaction size up 17 per cent, indicating Canadians still value experiences. Airline spending also increased 11 per cent, though with smaller average transaction sizes, pointing to potentially shorter or more cost-conscious travel .

The data also suggest shifts in foreign spending are changing how tourists experience Canada, with tourists allocating more of their budgets to activities rather than accommodation. Entertainment spending by visitors rose 21 per cent, while hotel spending declined nine per cent.

Regional spending trends were mixed across Canada. Alberta and Saskatchewan each reported 1.24 per cent increases in total spending, while Quebec had a more modest rise of 0.23 per cent. Manitoba recorded the largest decline at 2.14 per cent, followed by British Columbia at 0.86 per cent and Ontario at 0.57 per cent.

Moneris’s monthly data shows a gradual improvement through the quarter. Domestic spending declined 2.35 per cent in January, improved to a 0.63 per cent decline in February, and turned positive in March with a 0.73 per cent increase.

Despite shifts in category spending, Moneris says the broader picture is one of adjustment rather than withdrawal.

“Businesses can adjust to a more cautious, pragmatic consumer by focusing on meaningful customer experiences that prioritize value and quality and reduce friction as much as possible,” said Sean McCormick, vice-president of business development, data services at Moneris.

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Prime Minister Mark Carney is inviting the world’s largest investors, including top CEOs, entrepreneurs, and global business leaders, to the “first-ever” Canada Investment Summit in Toronto this September as part of his plan to unlock $1 trillion in new investments over the next five years.

The summit — taking place on Sept. 14 and 15 in Canada’s largest city — is focused on attracting new investment to support nation-building projects and grow the economy, according to the Prime Minister’s Office.

“Canada has what the world wants. We’re an energy superpower, with the most educated workforce in the world and rock-solid fiscal strength,” Carney said in a statement.

“The first-ever Canada Investment Summit will capitalize on those advantages to help drive billions in new investments into Canada. That means more growth for our businesses, more high-paying career opportunities, and a stronger, more independent Canadian economy for all.”

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The federal government is hosting the summit in partnership with the Canada Pension Plan Investment Board (CPPIB) and the Public Sector Pension Investment Board (PSP Investments).

“We believe Canada is at its best when it brings together public and private sector leaders to showcase the country’s strengths, deepen commercial relationships, and catalyze lasting economic value,” CPPIB chief executive John Graham said.

The federal government says it has already secured $97 billion in new investments across 20 new partnerships in the past year.

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