Canadians continue to spend their money on vacations, entertainment, and non-essential needs, but they have stopped going to restaurants and buying goods, according to a new report from the Royal Bank.

And while total spending was stable in March, the latest spending monitor report from the bank showed signs of weakness in goods spending, reflecting a decline in car sales.

Car sales rose by 3.7% in March, according to specialized consulting firm Desrosiers Consultants, but the sales volume was 1.59 million, which is less than the first two months of the year, where sales were estimated at about 1.7 million.

Due to inflation, spending on restaurants decreased by an average of 0.6% in the first quarter of 2023, a relatively small decline, according to Carrie Freestone, an economist at Royal Bank.

The Royal Bank spending monitor shows that even if spending on goods is decreasing, spending on non-discretionary services remains strong.

However, Ms. Freestone said in an email that the bank expects to see a more noticeable decline in estimated spending once the effect of the Bank of Canada's interest rate hikes takes hold.

It is noted that the central bank suspended the interest rate hike during its recent decision on the matter, in order to let its effects spread through the economy.

Consumer spending is one of the many economic data points that remained resilient despite persistent inflation and rising interest rates.

And despite the unchanged Gross Domestic Product (GDP) in the fourth quarter of 2022, consumer spending increased by 0.5%.

The next central bank interest rate decision is scheduled for April 12.

The Royal Bank report revealed in February that Canadians were visiting the grocery store more often, but they still spent about the same amount. Additionally, in March, the number of grocery transactions remained largely stable.

Food prices inflation has long exceeded the global inflation rate, with the price of products sold in grocery stores rising by 10.6% year over year in February, while overall inflation was at 5.2%.