Canadian Retail Sales Decline by 0.6% in January
Canadian Retail Sales Decline by 0.6% in January
On March 21, 2025, Statistics Canada reported a 0.6% decrease in retail sales for January, bringing the total to C$69.36 billion. This decline follows a revised 2.6% increase in December, suggesting a potential cooling in consumer spending as the new year commenced.
Sector-Specific Performance
The downturn in January’s retail sales was primarily driven by a 2.6% decrease in the motor vehicle and parts dealers subsector. Notably, new car dealers experienced a significant drop of 3.2%, while automotive parts, accessories, and tire retailers saw a 2.8% decline. In contrast, used car dealers reported a 1.6% increase in sales, highlighting a shift in consumer preferences towards pre-owned vehicles.
Food and beverage retailers also faced challenges, with a 2.5% reduction in sales. Supermarkets and other grocery retailers (excluding convenience stores) experienced a notable 3.4% decrease, and beer, wine, and liquor stores saw a 2.0% decline. These figures may reflect changing consumer behaviors or increased competition within the sector.
On a positive note, gasoline stations and fuel vendors reported a 3.2% sales increase in January, marking the fourth consecutive month of growth for this subsector. However, when adjusted for volume, sales at these establishments rose by a modest 0.1%, indicating that higher fuel prices may have contributed more to the sales increase than actual consumption growth.
Regional Variations
Regionally, retail sales decreased in three provinces during January. Quebec experienced the most significant decline, with sales dropping by 2.7% following a 3.8% increase in December. In Ontario, sales decreased by 0.9%, primarily due to reduced sales at motor vehicle and parts dealers. Conversely, Saskatchewan reported a 2.7% increase in retail sales, driven by higher sales at motor vehicle and parts dealers.
E-Commerce Trends
The digital retail landscape also faced headwinds, as seasonally adjusted retail e-commerce sales decreased by 0.9% to C$4.2 billion in January. This segment accounted for 6.1% of total retail trade during the month, reflecting a slight contraction in online consumer spending.
February Outlook
Looking ahead, preliminary estimates from Statistics Canada suggest a further 0.4% decline in retail sales for February. It’s important to note that these advance figures are subject to revision as more comprehensive data becomes available.
Implications for the Canadian Economy
The consecutive declines in retail sales raise concerns about the strength of consumer spending, a critical driver of Canada’s economic growth. Factors such as rising interest rates, inflationary pressures, and global economic uncertainties may be influencing consumer behavior. Policymakers and business leaders will need to closely monitor these trends to adapt strategies that support economic stability and growth.
