Retail sales defy expectations, but spending may be running out of gas.

Canadian consumers showed some resilience in the first quarter, and spending appears set to support economic growth—a reversal from the last quarter. While March’s gains were driven almost entirely by higher prices, our spending tracker suggests spending volumes continued to expand in April in line with Statistics Canada estimates. The key question is how long this resilience can last as higher gasoline prices increasingly show up in household budgets. In other words, how long before Canadian consumers start to run out of gas?

Key Takeaways

• Overall performance: Retail sales posted another strong month of nominal sales, growing 0.9% in March. This was largely concentrated in spending at gasoline stations and fuel vendors on higher gasoline prices. Core retail sales were down 0.1%. March retail volumes point to a weak month, down 0.7% in March.
• The headline gain was driven by gasoline stations and fuel vendors, where sales jumped 12.4% in March as higher gasoline prices were felt across the country. Food and beverage retailers also posted a modest gain of 0.5%.
• In volume terms, sales at gasoline stations and fuel vendors fell 1.9%, meaning households paid more but bought less fuel. Motor vehicle and parts dealers fell 0.5%. Core retail sales edged lower as building material and garden equipment and supplies dealers fell 2.9%, and general merchandise retailers declined 0.5%. This suggests the March gain was more about price pressure than stronger underlying demand.
• Core retail sales edged down 0.1% in March after two consecutive monthly gains. Core spending is a better read on underlying household demand. The decline suggests consumers are not broadly accelerating goods purchases. That said, retail sales were up 2.1% in the first quarter of 2026, marking a seventh consecutive quarterly increase. In volume terms, sales rose 1.2%, suggesting goods consumption should contribute to first quarter GDP after a weak end to 2025.
• Sales increased in nine provinces in March. Ontario posted the largest gain, rising 1.4%. Alberta sales increased 2.6%. Quebec was the only province to decline, down 0.8%.

Implications

Strength in the numbers but shouldn’t overplay the resilience as the energy shock is starting to show up in March data. Stronger retail sales volumes in the first quarter should be a contributor to Q1 GDP which will be released on May 29, 2026. StatCan’s advance estimate for April shows sales expanded 0.6% nominally. Consumers have shifted spending away from goods towards services, with the summer months a time where experiences tend to be preferred. The BDL Business Sales Tracker which includes services points to growth in April 2026.

Charts and Tables