Canadian Retail Sales (March 2026)

Retail sales rise in March, but Higher Prices Eat into Volumes

• Retail sales rose 0.9% month-on-month (m/m) in March, ahead of the 0.6% gain reported in the advanced estimate. In volume terms, sales declined 0.7% m/m, showing higher prices eating into activity.  
• The monthly gain was led by gasoline stations and fuel vendors (+12.4% m/m), reflecting the surge in gas prices – volumes were down 1.9% m/m. Sales at motor vehicle and parts dealers fell 0.5% m/m, led by weakness in used vehicles (-4.0%).  
• Core retail sales (excluding autos and gasoline) edged down 0.1% m/m, following two consecutive gains. The decline was driven by building materials and garden equipment (-2.9% m/m) and general merchandise retailers (-0.5% m/m). This was partly offset by gains in food and beverage retailers (+0.5% m/m), which were lifted by a 0.8% m/m increase in sales at supermarkets and other grocery retailers. 
• Retail e-commerce sales increased 1.5% m/m in March, with the share of total retail trade rising to 7.1% from 7.0% in the prior month. 
• Statistics Canada’s advance estimate points to a 0.6% m/m increase in April.
  
   

Key Implications

• The inflation effect was expected in March and is going to carry through to April with the CPI showing goods prices rising a cumulative ~1.8% (seasonally adjusted) through these two months. The sinking volumes figures suggest consumers are already cutting back, as higher energy prices eat into budgets.
• Our outlook is that private domestic demand (and particularly consumer demand) will be subdued in the second quarter, largely due to significantly higher energy prices. Provided energy prices begin falling in June, this should provide some relief and help private domestic demand gain traction in the second half of 2026. For the Bank of Canada, the current slack in the economy should allow them to look through the initial energy shock and wait for more clarity on how pervasive inflation pressures are becoming.

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