Canadian consumers are spending again—and economists are taking notice. Retail sales climbed 0.6 per cent in March, marking the first time shoppers have boosted purchases for three consecutive months since 2023, according to Statistics Canada data released Friday.
The momentum represents a meaningful shift after months of cautious consumer behaviour. February's 0.7 per cent gain followed a 1.2 per cent jump in January, painting a picture of Canadians gradually gaining confidence despite economic headwinds.
"Overall, it appears that retail sales in Q1 have posted their best quarter for growth since before U.S. trade tensions started to negatively impact consumer sentiment," said Andrew Grantham, senior economist at Canadian Imperial Bank of Commerce, in a report to investors.
Motor vehicles and parts dealers led the charge, with sales rising 1 per cent and marking a second straight monthly increase. Grocery stores, general merchandise retailers, and food and beverage outlets also saw stronger customer traffic. Even core retail sales—which strip out volatile gas station and auto dealer figures—posted a solid 0.6 per cent gain in February.
The Inflation Wild Card
Not all the news is rosy. Surging gasoline prices, driven by Middle East geopolitical tensions that erupted February 28, likely inflated these retail numbers. Higher pump prices mean less discretionary spending power for many households, especially lower-income families watching every dollar at the checkout.
"With higher pump prices limiting the ability of some households to make discretionary purchases, we expect consumer spending to slow again in volume terms during Q2," Grantham cautioned.
Canada's labour market remains uneven. While the unemployment rate held steady at 6.7 per cent in March, job-seekers continue to face headwinds in a sluggish hiring environment. Economic growth has been tepid overall, with the country narrowly avoiding recession as real gross domestic product inched upward early in the year.
The statistics agency's March estimate was based on responses from just 63 per cent of surveyed companies, meaning final figures could shift. Still, the three-month winning streak offers a glimmer of hope that Canadian consumers—facing U.S. tariffs, geopolitical uncertainty, and energy price volatility—are finding reasons to spend despite the economic noise.
This article is based on reporting from Canadian Mortgage Trends and Bloomberg data. For more on retail trends and Canadian economic indicators, visit Canadian Mortgage Trends.