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Retail Sales May 2025: Sales dip as Tariff Front-Running Eases
May’s 1.1% dip in retail sales reflects a normalization after tariff-driven front‑running rather than a broader consumer slowdown, with a 1.6% rebound expected in June.
Jasleen Trehan
“Canadian retail sales fell 1.1% in May to $69.2 billion, reversing roughly half of the gains seen over March and April as tariff-related front-running dissipated. Core sales were essentially flat, indicating concentrated weakness in autos and fuel rather than a broad pullback. With June’s flash estimate pointing to a 1.6% rebound (just shy of our 1.7% nowcast) and consumer confidence on the rise, we expect the Bank of Canada to hold rates next week as it awaits clarity on U.S. trading terms.”
Key Takeaways
- Overall performance: Retail sales declined 1.1% in May to $69.2 billion and fell 1.4% in volume terms, with three of nine subsectors posting losses — consistent with consumers pulling forward purchases ahead of looming U.S. tariffs.
- Autos lead the downturn: Motor vehicle and parts dealers saw sales drop 3.6% (new car dealers down 4.6%), reversing about half of the combined 7.0% increase over March and April. Automotive parts and tire retailers bucked the trend with a 1.7% gain.
- Core sales steady: Retail sales excluding motor vehicles and gas stations were essentially flat. Building material and garden equipment dealers rose 1.9%; furniture and home furnishings +0.5%; health and personal care +0.7% (marking an 11th consecutive monthly gain). Food and beverage retailers dipped 1.2%, led by lower beer, wine and liquor sales (-2.9%).
- Fuel sales ease: Gasoline station and fuel vendor receipts fell 1.4% in dollar terms (– 2.1% in volume), the third straight monthly decline as price effects unwind.
- Provincial trends: Nine provinces recorded lower sales in May. Ontario led with a – 2.1% (Toronto – 2.8%), followed by Alberta at – 1.0%. Only Nova Scotia bucked the trend with a 0.3% gain.
- E-commerce pullback: Online retail sales eased 1.7% to $4.3 billion, trimming the e-commerce share of total retail trade to 6.2% from 6.3% in April.
- June rebound anticipated: The advance estimate of a 1.6% month-over-month rise—just below our 1.7% nowcast—reinforces that May’s downturn largely reflected normalization after tariff front-running waned.
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