Retail Sales Slump: Canadian Economy Braces for Slowdown

Canadian retail sales took a sharp downturn in January 2025, falling 0.6% to $69.4 billion following a high rise in December 2024. Sales volume fell even more precipitously, down by 1.1%, pointing to a fall in the volume of physical items sold. The performance of subsectors differed, with pronounced declines in the sales of motor vehicles and motor vehicle parts (specifically, new car dealers) and food and beverage stores, while the revenue of gasoline stations rose, helping to mitigate these losses to some extent.

Early estimates for February 2025 indicate a further decline, with retail sales expected to drop by 0.4%. Several factors were responsible for this fall, including the return to normal spending following the holiday season and the expiration of temporary sales tax holidays that had stimulated sales in December.

Economic difficulties, including trade uncertainties and tariffs, are likely to further suppress consumer spending in the next few months. This sagging consumer activity portends possible difficulties for the overall economic growth of Canada.