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Momentum stalls as consumer shifts into a lower gear: Retail Sales December 2025

Retail sales fell 0.4% in December, led by a 1.6% drop in autos and weakness in other big-ticket categories, signalling that consumer momentum stalled at year-end. With real sales flat on the month, goods demand likely weighed on fourth-quarter growth. That softer finish comes after a generally solid 2025, with retail sales up 4.0% nominally and 2.3% in real terms for the year. Canadians are still spending, but they’re becoming more cautious and selective, particularly on rate-sensitive purchases. Domestic demand is shifting into a lower gear heading into 2026.

Jasleen Trehan

December is usually when Canadians open their wallets. Between holiday shopping, Boxing Day deals and other big-ticket splurges, you’d expect retail sales to get a noticeable lift. Instead, sales fell 0.4%. Autos led the pullback, but softness across other big-ticket categories suggests consumers hit the brakes at year-end rather than accelerating into the New Year. Real retail volumes were flat, suggesting that goods demand will likely weigh on fourth-quarter consumption growth. That softer finish contrasts with an otherwise solid 2025, with retail sales up 4% in nominal terms and 2.3% after inflation. But the momentum faded through the fall. Our Business Sales Tracker shows year-over-year spending growth slowing to 2.3% in December – about half the pace we saw in early autumn. Canadians are still spending, but they are becoming more cautious and selective, especially on big, rate-sensitive purchases. Trade has offered some late-year support, but the real story is that domestic demand is shifting into a lower gear as we head into 2026.

Key Takeaways

Overall performance: Retail sales fell 0.4% m/m to $70.0B in December, with declines in three of nine subsectors. Core sales (ex-autos + gas) fell 0.3%, while real (volume) sales were flat (0.0%). Over Q4, nominal sales rose 0.1%, but real sales fell 0.3%, implying goods consumption likely weighed modestly on Q4 GDP.
Strengths: Everyday categories held up: general merchandise +0.2%, health & personal care +0.4%, and sporting goods/miscellaneous +1.0%. Gas stations rose +2.8% (and +4.5% in volume). E-commerce +3.6% to $4.3B, lifting the online share to 6.1% of total retail – suggesting holiday demand persisted, but was more selective.
Weakness: Big-ticket, rate-sensitive categories drove the pullback: autos -1.6% (new cars -1.8%, second straight decline), building materials -4.0%, and furniture/electronics/appliances -1.7% (second straight decline). Notably, autos led 2025 growth (motor vehicles +4.7%; new cars +3.7%), so the year-end dip reads as cooling after earlier strength, not a broad consumer breakdown. The softness across these higher-cost categories reflects growing caution around larger purchases, consistent with the deceleration in card spending observed in the Business Sales Tracker.
Regional trends: Sales fell in seven provinces, led by Alberta (-2.1%). Ontario -0.2% (Toronto +0.5%). Quebec +0.6% (Montréal -0.8%). The pattern looks sector-driven (autos/durables) rather than widespread regional weakness. The December slowdown appears sector-driven rather than geographically broad-based, reinforcing that demand is moderating selectively rather than collapsing nationwide.
Advance estimate: StatCan’s advance estimate points to a +1.5% rise in January (early, subject to revision; based on 59.8% response rate). That hints December may be a pause rather than the start of a deeper pullback.

After a solid 2025 overall with retail sales up 4.0% nominally and 2.3% in real terms – momentum faded into year-end. Both the December retail data and BDL’s Business Sales Tracker point to a consumer that remains resilient but increasingly selective, maintaining everyday spending while scaling back on rate-sensitive, big-ticket purchases. Heading into 2026, retail activity is stabilizing, but at a slower and more cautious pace consistent with an economy transitioning into a lower gear rather than entering a downturn.