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Economic News

Canadian Retail Sales: July’s Widespread Decline Could Be Recouped in August

September 19, 2025
Florence Jean-Jacobs
Principal Economist

Highlights

  • Retail sales fell by 0.8% m/m in July, in line with the consensus of economists and Statistics Canada’s flash estimate.
  • July’s negative print follows an upwardly revised June advance of 1.6% (see table for details).
  • Sales contracted in eight of nine subsectors, with only auto sales posting a modest advance. Sales at motor vehicles and parts dealerships grew by a 0.2%, following a 0.1% advance in June and a 3.5% drop in May.
  • Lower prices dragged down retail sales at gasoline stations. Receipts fell by 0.9% despite slightly higher volumes.
  • Core retail sales, which exclude autos and gasoline, declined by 1.2%.
  • Retail volumes were down by 0.8%, while retail prices were nearly flat (+0.1%) (see graph 1).
  • Five provinces experienced decreases in retail sales, most notably in Ontario and Newfoundland and Labrador. The latter coincides with wildfires affecting the province in July. Sales in Quebec inched up 0.2%.
  • Statistics Canada’s preliminary estimate points to a positive print of 1.0% in August retail sales growth. If that proves correct, it will likely be driven in large part by a recovery in volumes, since goods prices were up a modest 0.2% that month.

Implications

July’s widespread decline in retail sales is not entirely surprising in the current economic environment, marked by trade uncertainty and subdued consumer confidence. But it should also be put in the context of solid advances in June and (most probably) August. In fact, retail sales have displayed high monthly volatility this year (graph 2). The more worrying trend concerns core sales, which have declined in three of the last four months. Momentum also appears to have faded in autos since May. In the coming months, we expect slowing population growth, a sluggish job market and stretched household finances to limit the advance of retail sales.

Today’s soft retail sales release for July reinforces our view that the Bank of Canada will continue cutting interest rates External link. this year, following this week’s 25 basis point reduction. This should come as welcome relief for consumers and the retail sector. We continue to forecast real GDP growth in the 0 to 0.5% range (q/q annualized) in the third quarter. While positive this is still uncomfortably weak, further supporting our outlook for monetary policy.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.