While the holiday season usually signals big spending and a sea of deals available to consumers in both digital and brick and mortar retail spaces, Canadians are adjusting their holiday plans to withstand widespread economic uncertainty. According to BMO, consumers expect to spend, on average, $2,310 on gifts, entertainment and travel this year (1).

Online spending is one area where buyers will still come in strong. A recent holiday survey found that approximately 42% of consumers plan to spend online, and Mastercard estimates online retail growth at 5.3% versus 2.5% in-store (2).

However, retail spending in Canada is expected to remain modest overall, with Deloitte Canada revealing that holiday spending is projected to grow about 3% overall in 2025 (3), which is lower than normal during this crucial time of year. In-store and online spending are both feeling the same pressure: Consumers are watching every dollar, cutting out extras and diligently comparing deals.

While consumer sentiment may be tepid this year, Canadians still plan to spend some of their hard-earned cash over the holidays. And some trends may help initiate a business boom in unexpected ways.

For Canadians who are concerned about rising prices, buying early or stocking up when items go on sale — especially if they’re afraid of the inflationary affects of tariffs — will be a strategic move. This “buy it now before it gets more expensive” mindset can give merchants a sudden boost in sales, even if it is rooted in fears over economic uncertainty.

This, according to BMO, has prompted 25% Canadians to begin their holiday purchasing well before the season even began in order to sidestep any potential price increases.

In order to make ends meet, consumers are willing to make spending cuts to holiday decorations (46%), travel (43%), dining out (42%), toys and games (40%), alcohol (38%), clothing (36%) and entertaining (36%). However, 25% expect to spend more on food and groceries compared to 2024.

“In the wake of recent tariff increases, rising unemployment, and an upturn in inflation, it’s not surprising that Canadian consumers are feeling a sense of trepidation heading into the holiday season,” said Sal Guatieri, senior economist at BMO, in a statement.

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“Though not elevated, annual CPI inflation has picked up to 2.4% in September after remaining below 2% in the previous five months, partly due to a 3.8% rise in food costs. By weakening the economy, the trade war has lifted the unemployment rate, undermining consumer confidence and income growth.”

Despite financial stress being quite pervasive, consumers are utilizing one helpful tool to be more price-conscious and stay within a set budget.

One of the biggest changes holiday shopping this year is the use of AI. For example, you might use generative chatbot to ask: “What’s the cheapest version of [X item] right now?,” or “Show me coupons or discount codes for [X] store or product.” These types of shortcuts are becoming part of the normal holiday shopping experience.

Recent data shows Canadian shoppers are warming up to the idea of using AI to help them shop. One study revealed that as many as 43% of holiday consumers plan to use AI tools to research and plan their purchases (4).

Read more: Here are 5 expenses that Canadians (almost) always overpay for — and very quickly regret. How many are hurting you?

While a tool like AI can support your budget and help prioritize better money management during the holidays, it’s still important to set and stick to a budget — especially if you’re hoping to spend less than the previous year.

Most importantly, you can look to set a limit on spending that allows you to cover all of your holiday costs with cash-on-hand rather than borrowed money. That way, you can avoid interest that will make your purchases more expensive in the long run.

Once you determine how much your total spending limit will be, decide how to allocate it among the people on your shopping list, as well as how much to spend on travel and entertainment. Having clear limits for each person on your list, as well as for other holiday expenses, will help you from going overboard.

Shop sales and use deal-finding tools to help you stick to your budget. And with adults in your family, you could consider doing a “Secret Santa” to avoid having to buy multiple gifts and stretching yourself too thin.

Thinking outside the box can help too. If you’re crafty, you could make gifts for some people, or create coupons to offer the gift of your time for things like babysitting or pet-sitting. Also, if you’re great at cooking or baking, making something festive and delectable can hit the mark.

Remember, the holidays are about much more than how wide you open your wallet.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

BMO (1); JLL (2); Deloitte (3); Google (4)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.