It appears interest rate hikes have finally made a pinch on Canadians’ spending habits.

A new report from RBC found spending in Canada has showed signs of slowing in July, with retail sales excluding vehicles still climbing, but now at a slower rate.

When it comes to discretionary goods and services, spending has flattened after several months of steady incline, while travel has cooled off following its peak in March.

Restaurant spending, meanwhile, has been on a steady incline since January 2022, but RBC notes the latest figures represent an increase in prices, rather than more restaurant visits.

The Bank of Canada began hiking interest rates in March 2022 with the goal of slowing down spending to ease inflation, but it’s done little to change spending habits as Canadians bonce back from the pandemic.

A higher unemployment rate – now at 5.4 per cent – is also contributing to changing spending habits, RBC notes. 

“Spending remains firm, but early signs of softening are consistent with a drift higher in the unemployment rate,” the report states.

“As we progress into the second half of the year, real consumption is expected to retreat as household debt servicing ratios climb to record highs.”