Holiday spending in Canada is expected to drop this year as inflation shrinks consumer buying power and economic uncertainty looms over household budgets, a new report says.

In its 2022 holiday retail outlook, Deloitte Canada said Tuesday overall holiday spending is expected to fall 17 per cent to $1,520 per household as recessionary concerns and higher interest rates rein in budgets.

Canadians are also planning to shop early and hunt for deals in a bid to stretch their spending power, Deloitte said.

鈥淪hopping is going to be earlier and deal hunting will be probably at a bit of an all time high as Canadians look to stretch their holiday budget,鈥� said Marty Weintraub, a partner and national retail consulting leader at Deloitte.

The report, based on a Leger survey of more than 1,000 Canadians conducted in late August, found more than a third of respondents plan to start shopping earlier than last year.

Retailers appear to be responding by rolling out Christmas-themed products earlier. The so-called Christmas creep in retail has resulted in many stores featuring holiday goods as early as September, often overshadowing Halloween.

Some stores are also introducing holiday promotions and deals earlier in the fall.

Amazon Canada, for example, introduced the Prime Early Access Sale last week, offering a two-day shopping event to Prime members.

Meanwhile, Black Friday 鈥� a massive retail event that once signalled the start of holiday shopping for many consumers 鈥� is increasingly how some Canadians plan to close out their seasonal spending, the Deloitte survey found.

鈥淲e saw quite a big jump in terms of how many Canadians will complete their shopping by Black Friday,鈥� Weintraub said.

The poll found 26 per cent of respondents will finish their holiday shopping on Black Friday, up from 18 per cent last year.

鈥淎ll the retail seasons over the past few years are getting earlier,鈥� Weintraub said. 鈥淭he retail market is competitive.鈥�

The planned reduction in spending this year is unusual compared with conventional retail trends, he said.

鈥淐anadians are telling us they鈥檙e going to be reducing their spending, which is not typical,鈥� Weintraub said. 鈥淲e鈥檝e seen it typically increase year over year, except in 2020.鈥�

The reduction appears to be propelled by mounting grocery bills and overall inflation.

The Deloitte report said 76 per cent of Canadians polled said they are reining in holiday spending because of higher food prices, followed closely by inflation worries and economic concerns.

The report found the drop in holiday spending reflects the financial challenges of Canadians, with 41 per cent saying their household finances have declined this year.

That figure is slightly higher in Atlantic Canada, where 52 per cent of survey respondents said their household finances have waned this year.

The report suggested the tougher economic times could be a boon for discount stores.

鈥淭he value-oriented retailers that compete on price 鈥� are clearly positioned to take market share right now,鈥� Weintraub said. 鈥淟ikewise, retailers in the luxury space that serve the 鈥榦ne per cent鈥� will be OK.鈥�

It鈥檚 retailers in the 鈥渕ushy middle鈥� that don鈥檛 appeal to bargain hunters or high-end shoppers that are going to feel the pinch, he said.

鈥淚f you鈥檙e in that mushy middle, I think it鈥檚 going to be much more challenging.鈥�

Brett Bundale, The Canadian Press

Like us on and follow us on .