Canada Retail Sales Continue to Rise, Buoyed by Higher Gas Prices — 2nd Update

By Robb M. Stewart

OTTAWA–Canadian retail trade is on track to rise for a fifth straight month, though gasoline is taking up more of consumers’ budgets and has likely meant spending has pulled back on other items.

Retail sales in April rose 0.5% from the month before to a seasonally adjusted 73.03 billion Canadian dollars, the equivalent of about US$51.65 billion, Statistics Canada said Friday. An advance tally of receipts indicates sales in May increased 1%.

April’s advance was slightly softer than the 0.6% growth economists anticipated, and was driven by increases at gas stations and fuel vendors. Beyond the pump, with a few exceptions, sales were muted and trade in volume terms was flat.

Statistics Canada offered no detail with its forecast for last month, though economists expect sales volumes will be soft given gas prices remained elevated as the war in Iran continued.

“It is becoming apparent that consumers are restraining their spending due to higher gasoline prices,” said Charles St-Arnaud, chief economist at Servus Credit Union. “The longer gasoline prices remain elevated, the bigger the headwind on spending will be.”

Some relief is expected with the fall in crude oil prices and the agreement between the U.S. and Iran to settle the war and reopen the Strait of Hormuz to shipping. Economists also expect Canadian spending to soon reflect a federal groceries and essentials benefit, which went into lower-income households’ bank accounts in June.

Cardholder activity tracked by Royal Bank of Canada, the country’s largest lender, indicates higher pump prices continued to absorb a larger share of household budgets in May, but spending broadly held up. The bank’s tracking indicated spending on essentials rose 1.1% between April and May, largely reflecting increased outlays on gasoline. Discretionary goods spending rose 1% to extend an improvement after near-flat readings earlier in the year.

Flat retail sales volumes in April after a decline the month before suggest consumers could be past the worst in terms of the fallout from high gas prices, Ariane Curtis, senior North America economist at Capital Economics, said. She estimates the rise in nominal sales in May points to sales volumes ticking up last month.

“That probably won’t be enough to prevent a slowdown in consumer spending growth this quarter but, with consumer confidence rising since its March and April lows and likely to improve further given the latest fall in gasoline prices, we suspect that consumption growth will pick up again in the second half of the year,” she said.

Statistics Canada’s retail survey for April showed a 5.1% rise in receipts for gas and fuel. Stripping the sector out, sales for the month were steady overall.

Trade at motor vehicle and parts dealers recovered, rising 1.7% from the month before after a decline of 0.1% in March. New car dealers saw a fourth consecutive monthly gain, and sales at used-car dealers rebounded from weakness in March.

Core retail sales, which exclude car and auto-parts dealers and gas stations, were down a second month running with a drop of 0.7% in April. Stripping out just the auto sector, monthly sales edged up 0.1%, weaker than the 0.8% increase economists expected.

Trade at food and beverage retailers and at general merchandise stores was down. Trade also faltered for a second consecutive month at sporting goods, hobby, musical instrument, book, and miscellaneous retailers.

The biggest rise in core sales came from building material and garden supplies retailers, the data agency said.

Statistics Canada has estimated industry-level gross domestic product rose a relatively solid 0.4% in April from the month before. That suggests the economy was on better footing after GDP fell 0.1% annualized in the first quarter following a 1% contraction in the final quarter of 2025.

“Canadian consumers are hanging in through the energy price shock by pulling back on spending for other items. As prices start to normalize, we expect to see consumer spending recover through the rest of the year,” Shelly Kaushik, senior economist at Bank of Montreal Capital Markets, said.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

06-19-26 1145ET