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Economic News

Canada: March Retail Sales Were Fuelled by Higher Prices

May 22, 2026
Florence Jean-Jacobs
Principal Economist

Highlights

  • Retail sales increased by 0.9% m/m in March, above Statistics Canada’s earlier flash estimate and the survey of economic forecasters (0.6%).
  • The increase in gas prices sparked by the Middle East conflict was apparent in the March results. Sales at gas stations were up 12.4%, explaining much of the advance. However, fuel volumes decreased month-to-month.
  • Sales of motor vehicles and parts fell by 0.5%, driven by lower receipts at used car dealers. Excluding autos, retail sales grew 1.4%, above consensus (0.9%).
  • Core retail sales, which exclude autos and gas, inched down 0.1%.
  • Quebec was the only province to experience lower nominal retail sales in March (-0.8%), which suggests a strong pullback in volumes as retail prices grew m/m. The CMA of Montreal registered a notable 2.0% decline.
  • Overall, real retail sales dropped by 0.7% m/m in March, after two consecutive monthly gains (graph 1). Retail prices advanced 1.7% in the month.
  • Statistics Canada’s advance indicator points to a 0.6% increase in April. Since seasonally adjusted CPI goods prices grew 0.7% in the month, this suggests volumes may have inched down to begin Q2.

Implications

Unsurprisingly, March retail sales were largely a story of the price at the pump. Only four of nine subsectors rose, with gas stations explaining more than the entirety of the headline advance, in dollar terms. Building material and garden equipment sales declined, along with other categories of discretionary goods, leading to weak core sales. This suggests consumers are having to do some arbitrage, squeezed by higher gas prices.

While the headline number may seem to have beaten expectations, in volume terms, the story is less rosy. That said, looking past monthly volatility and prices, it is encouraging to see real retail sales increase by 4.8% annualized in Q1, after two consecutive quarterly declines (graph 2). After today’s release, we are still tracking real GDP growth of 1.8% annualized in Q1 2026, as per our latest Economic and Financial Outlook External link.. That’s above the Bank of Canada’s latest Q1 forecast (1.5%) from April’s Monetary Policy Report.

Looking ahead, volumes were likely subdued in early Q2, judging by the April flash indicator. The second quarter will also be marked by continued commercial uncertainty, with the approaching CUSMA joint review. On the flip side, the temporary fuel tax cut should relieve some pressure on consumer budgets. And we anticipate positive effects on consumption in June from the Canada Groceries and Essentials Benefit (an expansion of the GST/HST credit). Another positive tailwind going into Q3 could come from domestic tourism External link., which looks bound for another strong summer season.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.