(May 22): Canadian retail sales continued to rise last month after a solid first quarter (1Q), but surging gasoline prices appear to be increasingly eating into household budgets.
An advance estimate suggests receipts for retailers rose 0.6% in April, following a 0.9% increase the previous month, Statistics Canada reported on Friday. The March figure was higher than the median projection of 0.6% in a Bloomberg survey of economists.
The data show a 2.1% expansion in 1Q, a seventh consecutive quarterly increase and a marked improvement from 0.4% growth in the last three months of 2025. In volume terms, retail sales were still up 1.2% in 1Q, but the historic gas price jump played a major role in March.
The statistics agency didn’t provide details for the April estimate, which is based on responses from 52.1% of companies surveyed. But the March report suggests higher prices at the pump may be increasingly crowding out other spending, and broader consumer strength seen in the previous two months appears set to wane.
Canadian government two-year bond yields fell about three basis points on the day to 2.883%, while the loonie weakened 0.2% to C$1.3805 per US dollar as of 8.55am in Ottawa.
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In March, sales were up in four of nine sectors, led by a 12.4% increase at gasoline stations and fuel vendors. In volume terms, sales in this sector fell by 1.9%. Excluding gas, retail sales in Canada dropped 0.2%.
“Overall, it appears that higher gasoline prices may already be limiting sales in other areas, which will see inflation-adjusted consumer spending growth decelerate again in the second quarter following a solid first quarter,” Andrew Grantham, senior economist at Canadian Imperial Bank of Commerce, said in a report to investors.
Sales at motor vehicle and parts dealers fell 0.5% in March. Excluding autos, retail sales rose 1.4% that month, higher than the median estimate of 0.9%.
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Core retail sales, which exclude gas stations and car dealers, were down 0.1%. Sales at building material and garden equipment and supplies dealers fell 2.9%, while general merchandise retailers dropped 0.5%, marking the first decline in three months.
“Today’s report doesn’t change our view that the Bank of Canada will remain on hold for the rest of the year,” Charles St-Arnaud, chief economist at Servus Credit Union, said in an email. The central bank is balancing “deflationary pressures from a weak domestic economy, especially the labour market, with inflationary pressures from higher gasoline and transportation costs,” he said.
Food and beverage retailers saw the largest increase in core retail sales with a 0.5% boost, led by supermarkets and grocery stores.
In volume terms, retail sales fell 0.7% in March.
That month, sales rose in nine of 10 provinces. The largest increase in dollar terms was seen in the populous province of Ontario, led by higher sales at gasoline stations and fuel dealers.
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