Canada Retail Sales Research Brief

Consumer spending ticks up, despite ongoing uncertainty. National retail sales rose 1.4 per cent month-over-month in January, which, after accounting for inflation, resulted in a 1.5 per cent increase in total volume. This was nearly double the preliminary estimate. Despite elevated borrowing costs and inflation, consumption beat market expectations to begin the year, which likely implies that Canada’s GDP returned to positive growth territory in the first quarter of 2023. Nonetheless, while consumer confidence has recovered since the Bank of Canada’s conditional interest rate pause in January, it remains well below its long-term average, implying downside risk that retail sales may soften over the coming months. Related commercial real estate property types, however, are well-positioned to withstand a short-term slowdown as fundamentals remain healthy for almost all property types.