Canada Retail Sales Research Brief

Consumers feeling the impact of elevated borrowing costs. Canada’s population grew by a near-record pace of 3.2 per cent in 2023, propping up household spending and causing retail sales to grow 1.2 per cent year-over-year in February. On a per capita basis, however, retail sales have largely been trending down over the past year and total sales dropped 0.1 per cent monthly in February — the third decline in the past four months. Discretionary spending is a particular weak point, as year-over-year sales in home furnishings, electronics, clothing and sportswear have fallen for three consecutive periods. Consumers are feeling the impact of elevated interest rates and are pulling back on optional and big-ticket purchases accordingly. While this moderation in consumer spending provides downside risk to first quarter GDP growth, it also puts downward pressure on inflation and lends support to a midyear interest rate cut.