The Bank of Canada (BoC) released its second-quarter 2026 Business and Consumer Outlook Surveys yesterday. The surveys showed Canadian consumers and businesses are concerned about the economic and financial impact of higher prices. Inflationary pressures have surged higher as the conflict in the Middle East drove up oil prices. On the other hand, oil producers are benefiting from higher oil prices. The BoC believes it’s largely contained to energy-related products but still holds some concern that the rise in energy prices could spill over to other goods and services within the consumer basket.

• The BoC’s Business Outlook Survey was unchanged at -0.4 in the second quarter of 2026. Optimism is running at historically lower levels amid geopolitical and trade tensions, along with surging inflationary pressures due to oil’s dramatic increase this year.
• The BoC’s Business Outlook Survey of Future Sales Growth fell to 8.0 in the quarter from 25.0 in the previous quarter.
• Businesses are concerned about the potential impact of higher prices stemming from the Mideast conflict. Businesses are expecting to face higher input costs, which could lead to an increase in selling prices.
• Higher oil prices have been good for Canada’s oil producers. Oil producers have expressed intentions to raise their investment and production plans.
• On the consumer side, households are concerned about high prices and remain uncertain about Canada’s economy. In response, Canadian consumers plan to pare back their spending plans.

The survey did not come as much of a surprise to markets. Consumers and businesses are feeling the weight of higher energy prices, while certain sectors of the economy continue to grapple with trade uncertainty with the US. Despite the ongoing risks, recent data is pointing to Canada’s economy expanding over the second quarter of 2026. Canada’s economy continues to demonstrate its resiliency despite a variety of factors that could derail growth.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.