New research reveals a widening gap in Canadian household spending as the cost of living remains a challenge for many
Traditional distinctions between "essential" and "discretionary" spending are breaking down as a reliable lens for understanding Canadian consumer behaviour.
A new study from Boston Consulting Group (BCG) is challenging some of the most entrenched assumptions in Canadian retail economics and reveals a widening divergence in spending patterns between higher- and lower-income households, playing out category by category.
The BCG research found that higher-income Canadian households are spending two to four times as much as lower-income households in certain major spending categories, while other categories show spending that is close to even across income groups.
Those variations, the authors say, are actively defying the conventional retail categorisations that financial professionals and economists have long relied upon.
Categories including household appliances, pet care, mobile technology, fresh food and staples, dining, automotive, beauty, apparel, DIY home improvement, and leisure travel were all examined for signs of income-based divergence.
The findings show that the gap is not static, it is accelerating in some areas and holding flat in others, often in ways that contradict intuition.
In dining, for instance, lower-income households are actively pulling back while their higher-income counterparts intend to spend more; a bifurcation that reflects not just spending power, but confidence, economic outlook, and lifestyle expectation.
Pet care and packaged snacks, meanwhile, are already heavily skewed toward higher earners, a finding that may surprise those who assumed these categories as broadly accessible.
What this means for the advice conversation
The data offers a timely prompt to revisit how client household finances are being stress-tested, particularly for clients in the middle and lower-income brackets where spending constraints are tightening fastest.
The report notes that categories including fresh food and staples, mobile service plans, DIY home improvement, leisure travel, and alcoholic beverages are showing relatively modest income divergence today but that higher- and lower-income households are already beginning to move apart.
The practical implication for wealth managers is a shift in methodology. Rather than treating Canadian households as responding uniformly to economic conditions, BCG recommends, within a retail strategy context, planning category by category, cohort by cohort.
