Total retail sales

Total retail sales in Canada are projected to reach $686.6 billion in 2026, up 2.6% from the previous year. Necessity-based retail categories, such as food, beverages, health and personal care, are the primary drivers of this rebound, as they benefit from population growth and stabilizing inflation. This follows the strong recovery in 2025, after consumers pulled back spending in 2024 amid elevated interest rates and persistent inflationary pressures. Retail performance was considerably volatile over the past five years, with back-and-forth swings since 2020.

In 2021, retail sales recovered from pandemic-induced declines as lockdowns shuttered non-essential retailers and shifted consumer spending patterns. Pent-up demand was released and government transfer payments bolstered household purchasing power. However, momentum stalled in 2022 with stagnant growth as inflation eroded real incomes and interest rate hikes reduced discretionary spending capacity. Robust immigration-fueled population growth, elevated inflation that inflated nominal sales values and strong performance in necessity-based categories surged retail sales 6.1% in 2023, the strongest annual growth in over two decades.

The jump in 2023 proved unsustainable, evidenced by the 1.1% contraction in 2024 when higher borrowing costs and deteriorating consumer confidence weighed on spending across the board. Enclosed shopping malls and fashion retailers experienced the most severe pressure, while neighbourhood and strip centres fared better due to their convenience and concentration of essential retail categories.