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Canadian Consumer Spending Remains Resilient in Q2 Despite Higher Costs, RBC Says

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Canadian consumers kept spending in the second quarter despite weak real wage growth and higher energy costs, with RBC card data showing an increase in expenditures, according to the bank in a note.

Retail sales, excluding gasoline stations, rose 2.4% quarter over quarter, while spending on essentials and discretionary services both increased 2.2%, said RBC Economics. Discretionary goods spending also rebounded 3.7%, driven by stronger household, construction and apparel purchases.

The resilience suggests that consumers contributed to second-quarter gross domestic product growth, added the bank.

"Canadian consumers continued spending through another challenging quarter, likely drawing on savings or taking on more debt to maintain consumption patterns amid weak real wage gains and higher energy costs," wrote RBC economists Rachel Battaglia and Abbey Xu in Wednesday's note.

The outlook remains cautiously positive as, beneath the surface, the fundamentals supporting consumer spending have also been improving, but higher energy costs, US tariff risks and signs of rising financial stress remain key risks to consumer spending, according to the bank.

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