Published 30 Jul 2026
Businesses Expect Prices to Keep Rising: What the Bank of Canada's Q2 Survey Means for Your Budget
Firms now see inflation running around 3%-3.5% and higher fuel costs squeezing household spending. Here is how to plan for it.
The Bank of Canada's second-quarter 2026 Business Outlook Survey, released July 6, offers an early read on where prices may be headed. And the signal is one every household budget should pay attention to: a much larger share of firms now expect to raise both their input costs and the prices they charge you over the next year, driven mostly by higher global oil prices tied to the conflict in the Middle East.
What the survey found
The share of firms expecting to raise their selling prices rose sharply, with most increases linked to elevated fuel and shipping costs.
Businesses now expect inflation over the next one to two years to sit in the 3% to 3.5% range, above the Bank's 2% target.
Higher gasoline prices are already dampening consumer spending on travel, dining and big-ticket items like furniture and vehicles.
Hiring intentions weakened to below their historical average, so job and raise prospects may be softer outside oil-producing regions.
One encouraging note: firms' one-year inflation expectations have been easing since April, following an interim agreement to end the war in mid-June.
Why it matters for your budget
When businesses expect to pass on higher costs, households tend to feel it at the pump, the checkout and on monthly bills. Two forces are pulling in opposite directions: prices may keep climbing faster than the 2% target, while a weaker hiring outlook could mean slower income growth. That combination can quietly erode the assumptions behind any long-term financial plan, especially if your projection still assumes flat prices and steady raises.
How to stress-test your plan in AffordaFlow
Raise the inflation rate on your expense projection toward 3%-3.5% for the next year or two and see how your surplus changes.
Give fuel, transportation and groceries their own line items so you can model the categories most exposed to oil prices.
Run a conservative income scenario with little or no raise this year to reflect softer hiring, and check whether your savings and debt-repayment goals still hold.
Build a small buffer into your emergency fund so a temporary price spike does not force you onto high-interest credit.
Modelling both a higher-inflation and a slower-income scenario side by side turns an abstract survey headline into concrete numbers you can act on before the pressure shows up in your account.
Source: Bank of Canada, Business Outlook Survey-Second Quarter of 2026 (July 6, 2026).
This article is informational and not financial advice.