Core Retail Spending Shows Modest Growth, but Signs Point to Slowdown

Canada’s March 2025 retail sales were lifted by a surge in auto purchases, but the underlying story is more restrained. Core retail spending—which excludes gas and autos—rose just 0.2%, as gains in building materials and clothing/accessories offset declines in general merchandise. This follows two months of contraction, suggesting that discretionary spending is stabilizing, but far from robust.

On a quarterly basis, real retail sales slowed sharply, rising only 0.8% annualized in Q1, compared to 5.8% in Q4 2024. With higher borrowing costs still filtering through the economy and job market softness emerging, many consumers remain cautious. While upcoming tax cuts may provide relief, the underlying momentum for goods-based consumption appears to be fading.

For Calgary’s retail real estate sector, this reinforces a wait-and-see stance. Essential categories may hold up, but demand for larger-format and discretionary-driven retail assets could soften as households tighten budgets.

Reference: Kyle Dahms, “Canada: Retail spending propelled by motor vehicles in March,” National Bank of Canada Economics and Strategy, May 23, 2025.

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