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Special Report

Canada Retail Sales Research Brief

February 2024

Households Continued to Spend Despite Higher
Interest Rates Eating Into Purchasing Power  

Retail sales end 2023 on a high note. Canada retail sales increased 0.9 per cent month over month in December, which was above preliminary estimates. This strong gain means that retail sales volumes rose by close to 5.0 per cent annualized in the final quarter of 2023, which was the strongest performance since the third quarter of 2021. Record population growth and the unseasonably mild weather are two factors that helped prop up household spending despite the still low level of consumer confidence and high interest rates eating into household budgets. This resilience in consumer spending supports the preliminary estimate that GDP growth returned to positive territory in the final quarter of last year, causing Canada to avoid a technical recession. The positive momentum may reverse, however, as elevated borrowing costs continue to feed through the broader economy. Advanced estimates for January suggest total sales fell 0.4 per cent. 

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