Economy January 23, 2026

Canadian Retail Sales Rebounded Sharply in November Before Cooling Off in December

Strong November consumer activity driven by food, beverage, and discretionary sectors falters as December sales decline

By Derek Hwang
Canadian Retail Sales Rebounded Sharply in November Before Cooling Off in December

Canada's retail sales exhibited a notable increase of 1.3% in November, fueled by gains across most retail categories, particularly food and beverage as well as discretionary goods. However, preliminary data for December indicate a 0.5% contraction, suggesting a cooling in consumer spending heading into the new year.

Key Points

  • November retail sales in Canada increased by 1.3% to $70.4 billion, showing consumer return to stores after a slow autumn.
  • Core retail sectors excluding automotive and fuel sales rose 1.6%, with a significant 3.0% jump in food and beverage due to normalizing liquor store operations in British Columbia.
  • Discretionary retail categories such as clothing/accessories and building materials also posted gains, while December preliminary data suggest a 0.5% decline, indicating weakened holiday shopping momentum.

Canada's retail trade saw a significant upswing in November, reversing a previously sluggish performance throughout the autumn. Total retail receipts reached $70.4 billion, representing a 1.3% increase compared to October, as consumers returned to shopping across a broad array of categories, according to figures released by Statistics Canada on Friday.

The growth was especially notable within core retail sectors, excluding typically volatile automotive and fuel sales, which themselves demonstrated a 1.6% rise. A major contributor to this expansion was the food and beverage segment, which surged 3.0%, largely supported by British Columbia liquor stores returning to normal service following earlier labor disruptions.

Discretionary retail segments also experienced a rebound. Clothing and accessory outlets posted a 2.4% increase following declines in previous months, indicating renewed consumer interest. Additionally, dealers of building materials and garden equipment registered their second consecutive monthly growth, reflecting rejuvenated home improvement expenditures.

Despite the optimistic trend in November, early estimates for December signal a reversal. Statistics Canada's advance indicator points to a 0.5% decline in retail sales during the last month of 2025, hinting that the holiday shopping season may not have sustained its vigor over the final weeks of the year.

Senior economist Andrew Grantham from CIBC reflected on these developments, stating, "Canadian retail sales picked up in November, but failed to hold onto those gains in December." He emphasized the enduring pattern of volatility that has dominated Canadian consumer spending throughout the current fiscal year.

Analysts interpret the November sales increase as primarily driven by temporary pent-up demand rather than a fundamental change in consumer spending habits. Grantham added that "the November gain hasn’t altered the broadly sideways trend in retail spending seen since early 2025," underscoring the cautious and inconsistent nature of recent retail activity.

Risks

  • The December decline in retail sales points to potential volatility and a lack of sustained consumer spending momentum heading into the new year, affecting the retail sector broadly.
  • Dependency on temporary factors like resumption of operations after labor disputes indicates underlying consumer demand may remain subdued, impacting sectors reliant on discretionary spending.
  • A broadly sideways retail trend since early 2025 suggests uncertainty for retailers and suppliers, influencing inventory management and investment decisions in retail-related industries.

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