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Economic News

Canada: Retail Strength in April and May Reinforce More Rate Hikes Are on the Way

June 21, 2023
Randall Bartlett
Senior Director of Canadian Economics


  • After two consecutive monthly declines, retail sales surged 1.1% in April, besting Statistics Canada’s flash estimate (0.2%) and the consensus of economic forecasters (0.5%) by a wide margin.
  • And it wasn’t a one sector story, with 8 of 9 subsectors moving higher in the month. It’s no surprise then that core retail sales—which excludes sales at gas stations and auto dealers—posted an even more solid 1.5% print. This was led by gains at general merchandise retailers (3.3%) and food and beverage retailers (1.5%).
  • The strength was also broad-based regionally, with increases in eight provinces.
  • But it wasn’t all good news. Total retail volumes edged higher by a much more modest 0.3%, meaning April’s bumper advance was largely a price story.
  • Notably, on a per capita basis, retail sales volumes continue to decline. Indeed, they have been trending lower since having peaked around mid-2021.
  • Looking ahead, Statistics Canada’s flash estimate is pointing to a 0.5% gain in May.


Coming off a strong first quarter of consumer spending, a second consecutive monthly move higher is not what the Bank of Canada will be looking for as it hopes to slow domestic demand. Indeed, we're tracking Q2 real GDP growth of around 2% annualized, roughly double the pace in the Bank's most recent forecast. As such, today’s retail print just works to reinforce our call that another 25 basis point hike in July is likely.