- Maëlle Boulais-Préseault
Senior Economist
Economic News
Canada: Retail Sales Finished 2024 on a Strong Note
February 21, 2025
Highlights
- Canadian retail sales increased by 2.5% m/m in December. The print was well above Statistics Canada’s flash estimate of 1.6%. The table below summarizes key data points.
- Today’s release means that retail sales grew by 1.3% in 2024 compared to 2023. After declining during the first two quarters of the year, the advance of 1.1% q/q in Q3 and of 2.4% q/q in Q4 have been more than enough to offset the sluggish start to the year.
- Motor vehicle sales rose for a third consecutive month, surging by more than 6% in the fourth quarter of 2024.
- Core retail sales, which exclude sales at motor vehicle and parts dealers as well as gas stations, were up 2.5%, in part due to a rebound in sales at food and beverage retailers (3.5%).
- In volumes terms, retail sales growth accelerated into the end of 2025, rising by 2.5% in December—the largest increase since June 2021 (graph).
- Retail sales were up in all provinces. Ontario saw its fifth consecutive monthly gain and the largest jump since June 2022.
- Statistics Canada’s flash estimate points to a decline of 0.4% in January.
Implications
Today’s print confirmed our view External link. that consumers waited for December to go ahead with their holiday purchases. The GST/HST break introduced by the federal government on December 15th seemingly played a big role in their shopping timeline. Overall, sales rose 2.5% in volumes terms in December, more than offsetting the slight weakness in November. The 3-month annualized rate of real sales growth now stands at a heady 10.2%. As a result, per capita spending has been increasing both in nominal and real terms recently, after weakness earlier in 2024.
Auto sales rose for the third consecutive month in December, driving much of the strength in the headline retail sale reading and ending the year on a very strong note. However, the end of electric vehicle rebates in December seemingly acted as an incentive for some consumers, which means that this strength probably won’t continue into the new year.
Indeed, Statistics Canada’s flash estimate for January shows that the strong pace of spending didn’t hold up. The advance indicator pointed to a pullback of 0.4% in total retail sales. Some of that might simply be due to colder-than-usual weather keeping shoppers at home. However, retail sales are likely to face further near-term challenges, with the tax break likely having pulled forward some purchases that would have occurred later.
After today’s release, we are tracking annualized real GDP growth of approximately 1.9% for the last quarter of 2024, slightly above the Bank of Canada’s forecast of 1.8% from the January Monetary Policy Report. But the threat of a trade war with the US and the uncertainty around it are expected to affect consumer confidence in the coming year and risk contributing to a slowdown in the pace of consumer spending growth in 2025. Adding to that, high housing costs and the looming mortgage renewal wall will also limit what Canadians can afford to spend on elsewhere. As such, while we expect the Bank to take a pause in its rate-cutting cycle in March, it’s likely just a brief pitstop as the central bank is likely to return to rate cuts thereafter.
