There may be a glimmer of hope next year for consumers who are feeling the pinch from the heightened cost of living, according to a new report from CIBC.
“We view 2026 as a transition year, with expectations for trade clarity ahead, while many of the constraints on consumers that are currently in place should fade in 2027,” said senior economist Katherine Judge at CIBC in a statement.
“So we are cautiously optimistic that better economic times lie ahead.”
CIBC’s report, released Tuesday, is titled ‘Unshackled? How the constraints on Canadian consumers should loosen in ‘27,’ and was co-written by senior economists Andrew Grantham and Judge.
The report explains how some financial pressures are expected to ease in 2027, including high inflation, spiking gas prices in the fallout from the Iran war and the shock from a recent wave of mortgage rate renewals that saw many homeowners lock in at higher rates compared to during the COVID-19 pandemic.
Although prices generally won’t be coming down, CIBC says Canadians may soon find it a bit easier to afford some goods and services.
“Canadian consumer spending has been held back by a number of restraints in recent years,” the report says.
“Facing high inflation for essentials such as food, mortgages refinancing at higher rates, and most recently, a spike in gasoline prices, households have had less money to spend on more discretionary items.”
“However, that could change, with some of the restraints to spending likely to loosen in 2027.”
Gas prices
Gas prices remain elevated as uncertainty and volatility persist in the Middle East region, and CIBC says lower-income Canadians have been impacted the most by higher gas prices in 2026.
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The federal government launched several measures aimed at tackling affordability this year, including the Canada Groceries and Essentials Benefit, which CIBC says will go even further next year.
“Elevated prices for gasoline and other essentials are squeezing lower-income households in particular in Canada,” said Judge.
“The federal government’s income support measures are providing a material offset, however, and if gasoline prices ease over the rest of the year, that will free up more spending power in 2027.”
“There are some positives ahead. While admittedly not guaranteed, the tightest restraint from high gasoline prices may have passed,” the CIBC report said.
Mortgages
In its report, mortgages are also a key area CIBC focuses on when it comes to consumers struggling to make ends meet.
A separate report from Rates.ca on Tuesday found almost half of Canadians surveyed said that since renewing their mortgages this year, more than half of their paycheques are being eaten up by their housing costs.
CIBC says, for the most part, mortgage rate affordability challenges are peaking and 2027 will see a more stable interest rate environment — even if they go up a bit.
“The pressure from mortgages renewing at higher rates should start to ease, with recent Bank of Canada research showing much more modest increases at the time of renewal by the second half of 2027,” the CIBC report says.
Judge says “the squeeze” from the higher post-pandemic mortgage renewal wave will fade now and into 2027, and as that shock subsides, consumers will gradually feel more empowered to spend more on non-essentials like leisure and entertainment.
Judge also says that if current trade negotiations with the U.S. go well, and there are no further tariff escalations, then the resulting sense of stability and certainty in the economy will empower businesses and investment, which can result in more hiring. A more stable job market and employment for Canadians can also help consumers feel more confident.
Canada’s unemployment rate fell to 6.4 per cent in July, according to Statistics Canada, which was the third straight monthly decline.
“Assuming that tariffs do not escalate from here, more certainty on the trade environment ahead will allow businesses to adjust and continue hiring,” said Judge.
“Any progress in reaching a trade deal will accelerate that process, and we expect the unemployment rate to fall to below six per cent in the second half of 2027.”
– with a file from Global News’ Uday Rana
Inflation cause by the world economic form foreign agendas will not change fact Canada under the Brookfield stockholder Carney will not change. Immigration of no skill and carbon tax on Canada’s industries will rise. Taxation and no one working for the country remains.
what colour is the sky in your world? Unless grocery prices are going to drop considerably there will be no relief. Does Canadas media companies ever think about the liberal tripe they spew or not?
Holy f*ck, nothing but pure propaganda. By 2027 I want this infernal Liberal regime down and done! ALL OF THEM PROSECUTED FOR TREASON AND SUPPORTING GENOCIDE!
Im sick of this garbage government making a garbage country out of CANADA!!
GTFOOTWOD
Not good enough. I call for the ouster of every liberal/nap sloth in the country.
This article reads like blind propaganda and ignore the challenges real people face are not improved by minor price cuts or a percentage here and there. That’s banker talk. The cost of electricity has surged two years in a row over 14%. Rent has doubled and even triples. Property taxes on homes doubled in some areas. Our insurance nearly doubled without a single word why. Many food items have doubled, not just the items which the med-is says has increased 20%. The price of auto maintenance is over $120/hr. You know what barely changed? Our wages.
Liberals have destroyed this beautiful nation with their destructive policies
Maybe’s, speculation, optimism. Just the typical narrative pushing a “positive” outlook. For the past 11 years it’s been the same spin and waiting game. This tactic and spin is played out.
It’ll take 10 years or more to begin to see improvement once the Lieberals are dedeated and Cave-in Con Carney runs to his new home in the US, and another 10 to actually see any improvements for all but the rich elite in the country. That’s the best case scenario.
We will start feeling better when Liberals are out of office and that might take years!
Yeah, let’s not blame the umpteen layers of carbon, plastic and packaging taxes inflicted upon Canadians by the LPC. Our tax dollar funded media is pathetic.
All this says is how everything is going up and will remain to do so. There’s no easing, misleading title.
We have been hearing this for years especially when Carney go elected he promised lower foot prices and dealing with Trump about the tariffs and what did we get nothing but higher prices. All smoke and mirrors and maybes our economy is in the tank but they won’t admit it.
How? Hope isn’t a strategy….