Retail sales rose 0.7% month-on-month (m/m) in February, extending gains into a second month. This was below Statistics Canada’s advance estimate for a 0.9% increase.
In volume terms, activity increased a more modest 0.3% m/m, suggesting the headline gain was largely driven by prices.
Motor vehicle and parts dealers posted a 1.0% m/m increase, driven by higher sales at new car dealers (+0.7% m/m) and a strong rebound in used vehicles (+4.0% m/m).
Receipts at gasoline stations and fuel vendors were flat on the month, though volumes edged up 0.1% m/m, pointing to modest demand.
Core retail sales—excluding motor vehicles and gasoline—also strengthened, rising 0.9% m/m and starting the year on firmer footing.
Core retail sales (excluding autos and gas) rose 0.6% m/m (a second consecutive increase), and were led by general merchandise retailers (+1.2% m/m), food and beverage retailers (+0.9% m/m), and clothing and accessories (+1.1% m/m). Building material and garden equipment dealers fell 0.6%.
Retail e-commerce sales declined 0.6% m/m in February.
Looking ahead, Statistics Canada’s advance estimate points to a further 0.6% m/m increase in March.
Key Implications
Consumers delivered another solid month in February, with early indications pointing to continued strength in March. That said, inflation jumped in March, suggesting some of the momentum is being driven by higher prices rather than broad-based demand growth. Our internal TD Spend data point to some softening in discretionary spending in March.
Higher energy prices will dent purchasing power, but we do not expect this to materially weaken domestic demand beyond what’s already embedded in our outlook. Together with the drags from weak population growth and trade-related headwinds the economy is expected to grow at a below-trend pace this year.
 in February, extending gains into a second month. This was below Statistics Canada’s advance estimate for a 0.9% increase.){kind=link}