Canada Retail Sales Research Brief

December retail sales surprise to the upside. The 2.5 per cent month-over-month jump in retail sales – which was almost a full percentage point stronger than the flash estimate and followed an unchanged reading in November – was partly due to lower interest rates, as well as consumers delaying purchases amid the start of the GST tax holiday. As a result, food, clothing, toys and books saw some of the largest sales gains. Inflation-adjusted sales also rose 2.5 per cent, as prices were unchanged. This upside surprise to retail sales volumes suggests that GDP rose by 0.3 per cent month over month in December, enough to lift fourth quarter annualized growth to an estimated 1.9 per cent. While lower borrowing costs will act as a tailwind for spending, potentially supporting a further pick up in GDP growth to begin 2025, uncertainties stemming for a looming trade war are starting to shake business and consumer confidence.