Retail sales dropped 0.4 percent to $69.3 billion in February as sales fell at new car dealers, Statistics Canada said Friday.
However, the agency said its early estimate for March suggested an increase of 0.7 percent for that month, though it cautioned the figure would be revised.
TD Bank economist Maria Solovieva said the bounce back in March was driven by Canadians pulling forward major purchases and stockpiling non-discretionary items ahead of incoming tariffs, so the rebound is expected to be short-lived.
“Consumers remain wary and may curb spending further until there is more certainty around employment, income prospects and inflation,” Solovieva wrote in a report.
“The Bank of Canada’s latest consumer survey suggests that the negative sentiment in response to tariff-related fears has surpassed even that experienced during the pandemic, leading households to revise down their overall spending plans.”
The Bank of Canada held its key interest rate steady earlier this month as governor Tiff Macklem said the changing trade picture has made producing accurate economic forecasts “challenging.”
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The central bank’s key policy interest rate is 2.75 percent.
Statistics Canada said Friday retail sales in February were lower in four of nine subsectors it tracks, with sales at motor vehicle and parts dealers down 2.6 percent, including a three percent drop at new car dealers.
However, core retail sales—which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers—rose 0.5 percent.
The increase in core sales came as sales at food and beverage retailers gained 2.8 percent while sales at supermarkets and other grocery retailers, except convenience retailers, gained 3.7 percent. Wine and liquor retailer sales rose 2.3 percent.
Sales at general merchandise retailers gained 1.2 percent, while furniture, home furnishings, electronics and appliances retailers dropped 2.9 percent.
In volume terms, overall retail sales fell 0.4 percent in February.
