Canadian Retail Sales Show Signs of Rebound in Early 2026

Statistics Canada reported a 0.4% decline in Canadian retail sales for December 2025, totaling C$70 billion (approximately $51.14 billion). This decrease was primarily driven by a significant drop in sales at motor vehicle and parts dealers, which fell by 1.6%. Other sectors, including building materials and furniture, also experienced declines, while sales at gasoline stations provided some offsetting gains. In volume terms, retail sales remained unchanged for the month, indicating a complex landscape for consumer spending.

ReutersCanada Retail Sales Seen Rebounding in JanuaryStatistics Canada reports December retail sales fell 0.4 per cent to $70BRetail sales fell 0.4% in December to $70B: Statistics CanadaBloomberg

However, early estimates for January 2026 suggest a potential rebound, with sales projected to increase by 1.5%. This would represent the largest monthly gain since December 2024, following a period of sluggish growth in the fourth quarter of 2025, where retail sales rose only 0.1%. Economists had anticipated a decline of 0.5% for December, making the actual results a mixed bag, as noted by BMO senior economist Shelly Kaushik.

Bloomberg

The retail sales figures are crucial indicators of consumer confidence and overall economic health, contributing approximately 40% to total consumer spending in Canada. Despite the recent downturn, the overall retail sales for 2025 increased by 4%, with volumes rising by 2.3%. The automotive sector was a significant contributor to this growth, although it faced challenges in December as consumer demand shifted.

Bloomberg

The Bank of Canada has maintained its key interest rate at 2.25%, amid ongoing economic uncertainties, including the impacts of U.S. tariffs and housing market fluctuations. Analysts suggest that the retail sales data will influence future monetary policy decisions, with expectations of potential interest rate cuts in 2026.

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While some economists view the January estimates positively, caution remains regarding the reliability of these early figures. The advance estimate is based on responses from only about 60% of retailers, which raises concerns about potential revisions. Critics argue that if core sales continue to weaken, it may indicate a broader trend of consumer caution rather than a mere stabilization of spending.

Canada’s Retail Sales Slipped In December, But January Looks Better

CIBC senior economist Andrew Grantham emphasized that the December retail sales figures indicate a modest drag on GDP for the fourth quarter, but the January estimates could signal a recovery. He stated, “If that is the case, it justifies the current on-hold stance from the Bank of Canada, although we will need a few more months of data to confirm if this upwards trend will hold.”

Statistics Canada reports December retail sales fell 0.4 per cent to $70B

• “The declines were concentrated in limited sectors and volumes were unchanged,” — Shelly Kaushik, Senior Economist, BMO

Statistics Canada reports December retail sales fell 0.4 per cent to $70B

• “It will take a few more months of data to judge if the January figure is the start of a new uptrend,” — Andrew Grantham, Senior Economist, CIBC

Bloomberg

As the Canadian economy navigates these fluctuations, the finalized retail sales data for January will be critical for assessing consumer demand and its implications for economic policy. The upcoming GDP figures are also anticipated to provide further insights into the economic landscape as Canada moves further into 2026.

Bloomberg