Canadians Are Spending More on Groceries and Increasingly Turning to Pay Later to Keep up

As grocery prices continue to strain household budgets across Canada, many Canadians are changing how they shop and manage their money to keep up.

The Grocery Gap Report, conducted by KOHO, found that average grocery spending per user increased approximately 5% year-over-year, rising from $261 to $275 per month. The increase was driven by both larger baskets and more frequent trips to the grocery store.

Over the same period, KOHO Pay Later adoption more than doubled, rising 109%, meaning that Canadians are opting for a buy-now-pay-later option for essential items like groceries. Trips to discount grocery retailers, like No Frills or Giant Tiger, also increased. Though different behaviours, both point to Canadians actively seeking ways to stretch their grocery budgets. The findings point to a clear pattern: Canadians are making deliberate adjustments to manage rising food costs, but grocery spending continues to climb.

“One of the most interesting findings is that affordability pressures are changing behaviour, but not always in predictable ways,” said Faye Lucas, Head of Consumer Trust at KOHO. “The findings make it clear that grocery costs are rising faster than Canadians can adapt. People are changing where they shop, how often they go, and how often they pay and yet the spending keeps climbing.”

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The report draws on grocery spending and financial behaviour data from more than 173,000 KOHO members between May 2025 and May 2026. A separate 17,400-member longitudinal cohort was used to validate year-over-year spending trends. KOHO’s financial tools are used by more than 2.5 million people from across Canada.

Canadians are making more grocery trips – and spending more each time

• Average grocery spending per user increased approximately 5% year-over-year, rising from $261 to $275 per month.
• The increase was driven by both larger grocery baskets and more frequent trips to the store. Average grocery basket size increased 2.4%, from $44.58 to $45.65 per transaction, while grocery trip frequency increased 2.9%, from 5.86 trips per month to 6.03 trips per month.
• Among a comparable group of members tracked over time, grocery spending per user increased 3.1% year-over-year, suggesting the trend extends beyond changes in KOHO’s member base.

Discount grocers are winning as shoppers look for ways to stretch their budgets

• As grocery costs continue to rise, Canadians are increasingly shifting their spending toward discount retailers.
  • Trips to discount grocery retailers increased 4.1% year-over-year, while trips to premium grocery retailers remained essentially unchanged, increasing just 0.3%.
  • Discount basket sizes increased 1.6%, compared to 0.9% among premium retailers.
• Canadians are becoming more intentional about where they shop as they look for ways to manage rising food costs.

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Pay Later adoption more than doubled amid rising grocery costs

Changing shopping habits are not the only sign of financial pressure.

• Among all KOHO financial products analyzed, Pay Later recorded the strongest adoption growth by a wide margin, outpacing all other products during the study period.
  • Pay Later adoption increased 109%, rising from 0.82% of users in May 2025 to 1.71% in May 2026. The largest increase occurred during the holiday grocery season before remaining elevated throughout 2026.
  • By comparison, Cover (KOHO’s overdraft protection product that helps members avoid declined transactions and overdraft-related issues) adoption remained relatively stable, while Credit Building and Earn Interest (KOHO’s savings interest feature that helps members grow their savings) adoption both declined over the same period.
• The findings point to growing demand for financial flexibility as Canadians navigate higher everyday costs.

Canadians are looking for savings at the grocery store, but spending pressures extend beyond groceries

• As grocery prices continue to rise, Canadians are increasingly turning to discount grocers and flexible payment options to help manage their budgets.
• However, grocery spending is only one part of the household budget. Over the same period, spending on food delivery increased 9% year-over-year, rising from $215 to $235 per month across major platforms including DoorDash, Uber Eats and SkipTheDishes.
• Spending on eating and drinking out increased 4%, while retail spending increased 6%.
• Canadians are adjusting how they spend as rising costs continue to put pressure on household budgets.

Younger Canadians are seeing grocery costs rise the fastest

• Canadians aged 18 to 24 recorded grocery basket growth of 5.4% year-over-year, more than double the national average of 2.4%.
• Despite having the smallest average grocery basket overall, younger Canadians experienced the fastest increase in grocery costs.
• Meanwhile, Canadians aged 35 to 44 continued to record the highest average grocery basket, likely reflecting household and family grocery spending.

For Canadians, groceries remain one of the few household expenses that cannot easily be delayed, reduced or avoided altogether. The Grocery Gap Report shows Canadians are making more trips, changing where they shop and increasingly seeking financial flexibility, yet grocery spending continues to rise.

That is why KOHO launched the 10-Year Grocery Giveaway, which will award one Canadian household $500 per month toward groceries for the next 10 years, for a total prize value of $60,000.

“Groceries are one of the most persistent financial pressures Canadians face,” said Daniel Eberhard, Founder and CEO of KOHO. “The 10-Year Grocery Giveaway is our way of putting meaningful support behind an expense that households cannot simply opt out of.”