Retail sales in Canada rise supported by gasoline prices

Ottawa —
Preliminary data showed that retail sales in Canada continued to rise during May, mainly driven by an increase in gasoline prices, indicating growth in nominal sales value rather than broad expansion in consumer spending.

Statistics Canada estimated that retail sales rose by 1% in May, after a 0.5% increase in April, suggesting continued activity in the second quarter of the year.

However, details of the April data reveal that the strength of sales largely comes from gas stations and fuel sellers, where sales in this sector increased by 5.1%, while retail sales excluding gasoline were almost stable.

The data also showed that sales remained unchanged when actual quantities were accounted for, meaning that the rise in prices, especially fuel prices, was a key factor behind the growth in sales value.

Core sales, which exclude gas stations and car dealers, declined by 0.7% in April, marking a decrease for the second consecutive month, with food and beverage store sales dropping by 2%, and general merchandise stores falling by 1.7%.

On the other hand, some sectors showed resilience, as auto sales and parts rose by 1.7% after a decline the previous month, and building materials and garden equipment stores recorded a notable increase among core retail categories.

At the provincial level, sales increased in six out of ten provinces, with the largest dollar value increase in Ontario, driven by higher auto sales and parts.

The data indicate that the Canadian consumer is still spending, but an increasing portion of this spending goes to essential costs such as fuel, which may limit the ability to spend in other categories in the coming months.