Canadian retail sales rose by 0.9 per cent in March, marking the fourth consecutive monthly increase, even as higher inflation, United States tariffs, and geopolitical tensions continue to weigh on the economy. Advanced estimates from Statistics Canada suggest that retail sales grew by 0.6 per cent in April, which would be the first time since 2022 that sales have risen for four straight months.
First-Quarter Performance
Retail sales increased by 2.1 per cent in the first quarter of 2026, representing the seventh consecutive quarterly gain, according to data released by Statistics Canada on Friday. This persistent growth underscores the resilience of Canadian consumers despite a challenging economic environment.
Sector Highlights
Consumer spending edged up across most sectors in March, with the largest gains at gas stations and fuel vendors, which surged by 12.4 per cent. This spike coincided with higher gasoline prices driven by the oil price shock resulting from the conflict in Iran. In contrast, motor vehicle and parts sales declined for the first time after two consecutive monthly increases, led by lower sales at used car dealerships. However, automotive parts, accessories, and tire retailers bucked the trend, posting an increase.
Core retail sales, which exclude gasoline and motor vehicle transactions, dipped by 0.1 per cent in March following two months of gains. The decline was largely attributed to lower sales at building material, garden equipment, and supply dealers. General merchandise retailers also saw a drop, falling for the first time in three months.
Volume and Economic Context
In volume terms, retail sales decreased by 0.7 per cent in March but rose by 1.2 per cent in the first quarter. Economic growth in Canada remained sluggish as U.S. tariffs and uncertainty surrounding the Canada-United States-Mexico Agreement continue to challenge certain industries. Nevertheless, the Canadian economy likely avoided a recession, with preliminary figures indicating that real gross domestic product grew by 0.4 per cent in the first quarter.
The persistent rise in consumer spending, despite headwinds such as inflation and trade tensions, highlights the underlying strength of the Canadian economy. However, the mixed performance across sectors and the decline in volume suggest that some consumers are feeling the pinch.
