Statistics Canada (StatsCan) announced that retail sales in Canada fell in May at its fastest pace in over two years. A consumer survey from the Bank of Canada (BoC) earlier in the week showed that consumers have pulled back on some spending due to concerns about their job security. Trade tensions with the US have caused much economic uncertainty. Retailers say that shifting demand and higher prices, particularly for raw materials and shipping, weighed on sales during the month.

• Retail sales in Canada fell by 1.1% in May over the previous month, just over the 1.0% decline estimated by economists, according to a Bloomberg survey. May’s drop was the largest since early 2023. Retail sales have dropped in three of the five recorded months of 2025.
• There was a sharp drop in sales of motor vehicles in May, particularly of new vehicles. Prices were up, which deterred potential buyers. The automotive industry as a whole has been weighed down by steep US tariffs.
• Retail sales excluding automotive fell by 0.2%. Sales also fell at gasoline stations over the month.
• StatsCan estimates that retail sales rose by 1.6% in June, which would mark a relatively strong rebound. Few details were provided, and only 50% of companies surveyed responded. Final June data will be released on August 22.
• The retail sales report will likely not impact the next BoC interest rate decision, which will be announced on July 30.

Canadian households appear to be more cautious with their spending habits, prioritizing essentials amid higher prices due partly to US tariffs. While the outlook for June looks promising, retail sales have been relatively muted in 2025, indicative of lower confidence levels as consumers grapple with economic and labour market uncertainty. Prime Minister Mark Carney says the government is continuing to try to negotiate a US trade deal.

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