- Canada retail sales jumped 2.5% m/m in December 2024 to C$69.6B, with core sales also up 2.5% and gains across all subsectors.
- November sales rebounded 1.3% headline and 1.6% core after October weakness, but volumes remain below earlier 2024 highs.
- December inflation was mixed as CPI rose 2.4% y/y but fell 0.2% m/m, helped by a 7.1% m/m drop in gasoline, while core CPI was 2.1% y/y.
- Analysts flag December strength as potentially seasonal or tax-distorted (GST/HST holiday), with a January advance estimate pointing to a 0.4% pullback.
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The data through November and December 2024 indicate that Canadian consumer spending showed signs of guarded recovery, marked by strong gains in December but offset by softer momentum in November and projected weakness in early 2025. While December’s 2.5% rise in retail sales (both headline and core) signifies a robust close to the year, November’s 1.3% gain in total and a 1.6% core rebound were less convincing—especially following previous month declines.
Inflation dynamics played a central role: the Consumer Price Index (CPI) increased 2.4% y/y in December, up from 2.2% in November, but monthly CPI dropped 0.2%. Core inflation (excluding food and energy) rose 2.1% y/y. Sharp declines in gasoline prices (−7.1% m/m) exerted downward pressure on the headline figure. The GST/HST holiday began mid-December, creating distortions—some categories saw price drops or slowed increases relative to a year earlier due to tax exemptions, complicating comparisons.
Consumer behaviour points to resilience but growing selectivity. Spending growth in November was concentrated in food and beverage (led by a large rebound in liquor sales after BC’s labour disruptions), clothing and accessories, and building materials & garden equipment. RBC cardholder data supports broad strengths in discretionary goods during the holiday period, though services and essentials saw muted growth.
On balance, December’s strength may reflect seasonal factors (holidays, tax holiday impact, gas prices) more than a durable structural rebound. The advance estimate for a −0.4% drop in January retail sales suggests potential rolling back of gains. Key strategic considerations revolve around how households adjust amid cooling housing prices, elevated borrowing costs, labor market slack, and slower migration. Determining whether December was a “false peak” or foundational bounce will hinge on Q1 2025 data.
Supporting Notes
- Retail sales up 2.5% in December 2024 to C$69.6 billion; core retail sales ex autos/gasoline/fuel vendors increased 2.5% month-over-month.
- Sales rose in all nine subsectors in December; food & beverage retailers and motor vehicle & parts dealers led October gains.
- November saw 1.3% growth in total retail and 1.6% in core retail; retail e-commerce down 2.8%, gasoline station sales up modestly in nominal but slight contraction in volume.
- CPI rose 2.4% y/y in December, up from 2.2% in November; headline dropped 0.2% month-over-month; gasoline prices down 7.1% m/m and down 13.8% y/y.
- Core CPI excluding food & energy rose 2.1% y/y; shelter costs (especially rent) remain elevated (rent y/y up ~7.1% in Dec).
- GST/HST tax holiday starting December 14 distorted CPI and specific categories such as clothing, eating out, alcohol.
- Building materials & garden equipment and supplies saw gains +2.1% in November, second consecutive month up; liquor store sales jumped after BC strike resolved.
- Advance/provisional estimate for January retail sales: decline of ~0.4% nominal.[/li]