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Retail Sales July 2025: Cautious consumers slow spending in summer
Canada’s retail sales fell 0.8% in July, a natural give-back after June’s surge but also a sign of consumer caution. Core sales and volumes slipped, with food, clothing, and durables hit by high prices, tariffs, and weaker job prospects. Outliers like liquor and e-commerce helped, and an August rebound of 1.0% is expected, showing households are selective, not collapsing.
Jasleen Trehan
“July’s pullback in retail sales reverses June’s surge in spending: core sales flipped negative and rate-sensitive items experienced softening.”
Key Takeaways
- Retail sales fell 0.8% m/m to $69.6B, with core sales down 1.2% and volumes also declining 0.8%, showing a real softening in demand rather than just price effects.
- On the upside, motor vehicles and parts gained 0.2%, supported by a strong 5% increase at “other” vehicle dealers, while beer, wine and liquor stores rose 3.2% and e-commerce advanced 2.2% to $4.3B, lifting its share of total sales to 6.1%.
- The bulk of the weakness came from food and beverage stores (-1.3%, with grocers -2.5%), consistent with July’s CPI showing food inflation still elevated, alongside a 2.9% drop in clothing, as discretionary demand softened against a backdrop of job losses and high youth unemployment in the July labour report. Electronics and appliances (-2.5%) and furniture (-0.6%) also weakened, while building materials and gardening stores fell 2.1% after strength in June. Gasoline stations declined 0.9% in dollar terms but volumes rose 0.2%, in line with lower gas prices in July, which were down more than 16% year-over-year.
- Sales were down in five provinces, led by Ontario (-1.6%, Toronto: -1.6%) and BC (-0.8%) led the drag, while Newfoundland and Labrador (-8.8%) was sharply lower due to wildfire disruptions. By contrast, Quebec and PEI provided rare gains that helped offset national weakness.
- July’s retail pullback was driven mainly by domestic caution weaker labour markets, high borrowing costs, and sticky food prices but tariff effects also remained visible in some consumer categories, with counter-tariffs pushing up prices for food, clothing, and durables.
- Looking ahead, StatsCan’s advance estimate points to a 1.0% rebound in August, supported by stabilizing gasoline prices, some recovery in durable goods, and back-to-school demand. Still, with labour market slack building and confidence weak, any rebound may be modest.
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