Canada Retail Sales Research Brief

Economic uncertainty weighing on spending outlook. Household consumption was on the rise heading into 2024. Once the Bank of Canada began its monetary easing cycle, retail sales started trending up, jumping 6.0 per cent between June and December. This was highlighted by the 5.6 per cent annualized surge in consumption growth last quarter. At the same time, historic population gains also fuelled a 26 per cent increase in retail sales between 2021 and 2024, aiding the broader sector despite a restrictive interest rate environment. Looking ahead, however, ongoing trade disputes and economic uncertainties are beginning to hurt consumer confidence. The Bank of Canada’s recent consumer survey showed that households are raising precautionary savings. Consequently, total retail sales fell 0.6 per cent monthly in January, which, after accounting for inflation, translated into a 1.1 per cent drop. Preliminary nominal sales estimates for February point to a further decline of 0.4 per cent.