Erik Hertzberg
((Bloomberg) – Canadian retail sales will decline after weakening in the second quarter, with consumer spending slowing amid rising trade uncertainty and slowing population growth.
Retailers’ receipts fell 0.8% in July after a 1.5% increase in June, according to Statistics Canada.
June’s data matches a Bloomberg survey of economists. Retail sales rose only 0.4% in the second quarter, a 1.1% slowdown in three months of the year.
Quarterly retail data are the weakest since mid-2024, highlighting consumer caution in the face of economic and tariff uncertainty. Weaknesses may also reflect a slowdown in immigration due to the Canadian government’s curb.
“This is often more cautious about consumer spending in the case of tariff uncertainty, especially when compared to steady growth in the second half of 2024,” Andrew Grantham, an economist at the Canadian Imperial Commercial Bank, wrote to investors in the report. “It is not that kind of consumer spending, and it should worry Canadian bank policymakers from an inflationary perspective as they debate whether to lower interest rates further.”
The Bureau of Statistics did not provide details of the July estimate, which was based on responses from 55% of companies surveyed.
The increase in June was driven by the food, beverage and clothing retailer sector. Sales rose in all partitions in the month.
Sales in June rose 1.9%, higher than the median economists expected. Core retail sales, excluding gas stations and car dealers, expanded by 0.9% in the second quarter, also lowered from 1.8% in the first three months of the year.
From a quantitative perspective, total retail sales rose 1.5% in June. Sales grew in six out of 10 provinces, with Toronto’s retail sales up 3.9%.
Although Canadian banks have lowered significantly lower interest rates since last June, the data highlighted that household consumption has increased in tariffs and economic uncertainty and has gradually slowed down household consumption. Over the past three sessions, policy makers have borrowed at 2.75% as they weighed on the continued tenacious core inflationary pressures of the economy.
So far, the losses from the trade war have been limited to sectors that rely on U.S. demand. The Bureau of Statistics reported that 27% of retailers said they were affected by trade tensions in June, compared with 32% in May. The most common effects cited, it said, are “price increases, changes in demand for products, and delays in the supply chain.”
– With the assistance of Randy Thanthong-Knight and Mario Baker Ramirez.
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Last modified: August 22, 2025
