(Jan 23): Canadian retail sales are on track to eke out some growth in the final quarter of last year, showing consumers remain cautious and under pressure.
Receipts for retailers fell 0.5% in December, according to an advance estimate from Statistics Canada on Friday.
The drop followed a 1.3% gain in November, which was stronger than the 1.2% increase expected by economists in a Bloomberg survey.
Stripping away price changes, retail sales volumes rose 1.1% that month. They’re up just 1.5% from the previous year, and they’ve been roughly flat since April.
Retail sales are set to grow 0.2% in the fourth quarter of 2025, assuming the agency’s flash estimate is correct. While faster than the 0.1% gain in the third quarter, it’s still a marked deceleration compared to the start of 2025.
Sales in November rose in eight of nine subsectors and were led by increases at food and beverage retailers. The agency said beer, wine and liquor retailers contributed most to the increase, jumping 14.3% as labour disruptions ended in British Columbia.
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Motor vehicle and parts sales rose 0.3%. Gasoline sales were up 2%.
US tariffs have slammed exports, sapping consumer optimism. With unemployment at 6.8%, the labour market is also soft. Coupled with a shrinking population and families renewing mortgages at higher rates, the macroeconomic conditions point to continued headwinds for retail sales.
At the same time, the Bank of Canada also trimmed interest rates by 100 basis points last year, adding some relief for borrowers.
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The central bank has signalled a prolonged pause, and markets and most economists expect policymakers to hold rates steady for most of 2026.
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