Canadian Retail Sales (December 2025)

Retail sales end the year on weak footing, rebound in January 

• Retail sales fell 0.4% month-on-month (m/m) in December, coming in slightly stronger than Statistics Canada's -0.5% advanced estimate.
• In real terms, retail sales volumes were unchanged on the month, indicating December’s headline decline was driven by prices rather than weaker overall activity. 
• Auto sales were the key swing factor falling 1.6% m/m, with declines across all store types. New car dealers (-1.8% m/m) led the pullback, extending the subsector’s second straight monthly drop. 
• Receipts at gasoline stations and fuel vendors rose 2.8% m/m in nominal terms, while volumes jumped 4.5% m/m, marking a second consecutive monthly increase and implying stronger demand alongside lower prices. 
• Core retail sales (excluding motor vehicles and gasoline stations) slipped 0.3% m/m in December, reversing part of November’s 1.5% gain and leaving underlying momentum softer into year-end. 
  
  • The largest declines were at building material and garden equipment and supplies dealers (-4.0% m/m), following two months of gains.  Furniture & home furnishings stores (-1.8%), and electronics & appliance stores (-1.6% m/m) also posted notable declines.
  • Partially offsetting these losses were gains at miscellaneous retailers (+1.2%), sporting goods, hobby, book & music stores (+0.6%), and general merchandise stores (+0.2% m/m).
• Retail e-commerce sales increased 3.6% m/m in December, lifting its share of total retail trade to 6.1% from 5.8% in November. 
• Statistics Canada’s advance estimate suggests retail sales increased 1.5% m/m in January.

Key Implications

• December capped off what was already a soft quarter. The weakness was largely driven by autos, which were a key drag and are likely to weigh on durable goods spending. As we argued in our recent report, new vehicle sales are expected to fall in 2026, as tariff-related supply chains remain a headwind for consumption. Excluding autos, however, sales volumes ended the year on a firmer footing and if the advanced estimate is any guide, the start of the new year could prove fairly strong. 
• Our outlook for Q4 real consumption growth remains subdued, tracking at a below-trend pace of 0.6% (quarter-on-quarter, annualized). Services are still expected to be the main driver in Q4 and our internal credit and debit card data suggest some year-end momentum spilling into January. That said, the pickup is unlikely to be strong enough to lift overall consumption meaningfully above a below-trend pace.    

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