Canadian retail sales surged higher at the end of last year to post their largest monthly increase since May 2022, but Statistics Canada says its early estimate for January pointed to a pullback to start 2025.
The agency said Friday retail sales in December rose 2.5 percent to $69.6 billion, topping the early estimate for the month that suggested a gain of 1.6 percent.
However, the momentum from the strong finish to 2024 appeared to evaporate as the preliminary estimate for January pointed to a decline of 0.4 percent to start the new year.
CIBC senior economist Andrew Grantham said consumer spending was clearly improving during the second half of 2024, even before accounting for the temporary boost in December from the GST holiday.
“However, recent tariff uncertainty may have resulted in households tightening the purse strings again,” Grantham wrote in a report.
U.S. President Donald Trump has announced plans to impose wide-ranging tariffs on U.S. imports from Canada and around the world.
Statistics Canada said that December sales were up in all nine of the subsectors it tracks as sales at food and beverage retailers rose 3.5 percent for the month.
The increase came as sales at supermarkets and other grocery retailers, except convenience retailers, gained 3.9 percent, while beer, wine and liquor retailers rose 3.9 percent and specialty food stores added 2.4 percent.
Meanwhile, sales at motor vehicle and parts dealers gained 1.9 percent in December, boosted by a 2.0 percent gain at new car dealers. Sales at automotive parts, accessories and tire retailers rose 4.7 percent and used car dealers added 3.2 percent.
Core retail sales—which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers—rose 2.5 percent in December.
In volume terms, retail sales in December rose 2.5 percent.
“It seems Santa had plenty of gifts for Canadians in December, as it’s difficult to find any concerning spots in this report,” BMO senior economist Shelly Kaushik wrote in a report.
“Even if the momentum fades into the new year, these figures add to the argument for the Bank of Canada to pause at next month’s meeting.”
The Bank of Canada’s next scheduled interest rate decision is set for March 12.
