Last Friday, Statistics Canada (StatsCan) reported that Canadian retail sales jumped higher in March 2026. On the surface, the growth in retail sales was an encouraging number. However, a closer look beyond the headlines showed broad-based spending began to decline as higher oil prices took hold. The majority of Canadians’ spending in March was related to gasoline prices, whereas non-gas sales declined. Canadians have been resilient amid trade and geopolitical tensions, but higher inflation clouds the spending outlook.

• Retail sales in Canada rose by 0.9% in March, which was higher than the initial estimate from StatsCan. March’s increase was the third straight and higher than the 0.7% increase in February. Looking ahead, StatsCan estimated another increase in April.
• A closer look, however, showed that the increase in March was driven by much higher gasoline prices, which were pushed up alongside the price of oil amid the conflict in the Middle East.
• Excluding gasoline, retail sales dropped by 0.2%, suggesting Canadian households are tightening their pockets amid higher energy prices.
• StatsCan also reported that producer prices climbed by 2.0% in April, adding to the 2.4% increase in March. Energy costs rose by another 7.7% in April.
• The Bloomberg Nanos Canadian Confidence Index was largely unchanged over the week ended May 22. Canadians are concerned about the economy and their personal finances amid elevated inflationary pressures.

Canadian households and businesses have demonstrated their resiliency over the past year amid trade disruptions with the US. Now, they are facing rising inflationary pressures as the Mideast conflict pushes up energy costs. The Bank of Canada will have much to consider when it makes its next interest rate decision on June 10.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.