Canada Retail Sales Research Brief

Consumption up as prices ease. The 0.3 per cent drop in total retail sales values in January belies underlying consumer strength. The slight decline was fueled in large part by a 2.4 per cent drop in motor vehicle and parts dealers sales. While high interest rates are one factor contributing to this slight pullback, the decline was also a result of temporary weakness in motor vehicle manufacturing amid some major auto plants undergoing repairs. Core retail sales, which exclude gasoline and motor vehicle-related spending, jumped 0.4 per cent in the month. In addition, after controlling for inflation — which fell in January as prices moved lower — sales volumes rose 0.2 per cent, translating into a 1.5 per cent annual gain. This strong showing in yearly sales points to Canada’s rapidly rising population, which grew at a historic pace of 3.2 per cent annually as of October 2023. Newcomers have kept retail sales on a positive trajectory despite per capita spending trending down over the past year.