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.
