News
Canada Economy · Consumer Spending · Inflation · Retail Sales
Canadian retail sales increased by 0.5 percent to $73-billion in April, propelled by a 5.1 percent surge in sales at gas stations and fuel vendors and a 1.7 percent rise at motor vehicle and parts dealers, while overall sales volumes remained unchanged, Statistics Canada reported.
This headline growth masks underlying weakness, as core retail sales, excluding gas and auto, fell 0.7 percent for the month. Significant declines were observed across various sectors, including food and beverage retailers, which dropped 2 percent, general merchandise retailers, down 1.7 percent, and the sporting goods, hobbies, books and musical instruments category, which decreased 1.5 percent for a second consecutive month.
BMO senior economist Shelly Kaushik stated that higher gas prices are taking a bite out of consumer spending. CIBC senior economist Andrew Grantham confirmed that elevated gas prices are cutting into households’ ability to spend in other areas, which makes it harder for companies to pass through cost increases and reduces the likelihood of broad-based inflationary pressures.
Grantham expects the Bank of Canada to maintain interest rates throughout 2026. Conversely, Kaushik anticipates a recovery in consumer spending through the rest of the year, citing lower energy prices in June and a Middle East peace deal between the United States and Iran, which has eased oil prices by waiving sanctions and opening the Strait of Hormuz.
Statistics Canada's advance estimate for May retail sales indicates a one percent increase, though this figure is subject to revision.
