Canadian households continued spending despite trade uncertainty, slower population growth and weak consumer sentiment, adding to signs of firmer economic momentum.
BNN Bloomberg spoke with Randall Bartlett, deputy chief economist at Desjardins Group, about the drivers of consumer activity and the implications for economic growth and Bank of Canada policy.
Key Takeaways
- Retail sales increased one per cent in May, while sales volumes rose 0.3 per cent for their first gain in three months.
- Higher prices accounted for about 70 per cent of the monthly increase, largely reflecting more expensive gasoline.
- Sales advanced in all nine retail subsectors and in every province except Nova Scotia.
- Statistics Canada’s preliminary estimate suggests sales increased another 0.4 per cent in June.
- Continued consumer strength could support third-quarter growth and reinforce the Bank of Canada’s decision to hold interest rates steady.
Read the full transcript below:
LINDSAY: Canadian retail sales rose by one per cent in May, driven by higher gasoline prices. This data marks the fifth consecutive month of gains, and here to tell us more is Randall Bartlett, deputy chief economist at Desjardins Group. It’s great to have you join us. Thank you.
RANDALL: Yeah, thanks so much for having me.
LINDSAY: So, the advance estimate shows a 0.4 per cent gain in June after rising one per cent in May, as we saw today. How meaningful is this run of steady monthly gains in what otherwise seems like a bit of a slowing economy?
RANDALL: I think it’s very meaningful, actually. When we look at what we saw in May, obviously, headline retail sales were up, but I think the real story is that retail sales volumes were up in the month, and that’s despite the fact that we had sharply higher gasoline prices in May. And when you then move on to June, you see that, you know, the expectation is for a 0.4 per cent print in the month. In June, we had gasoline prices come down, so that means, in in volume terms, there’s a good chance that real retail sales could top a one per cent gain in June, which sets up very nicely for a strong third quarter as well. There were a lot of cheques sent out by the federal government in June and in July to low- and middle-income Canadians. So, this print suggests, you know, Canada’s teeing up to a pretty good middle part of the year when it comes to the consumer.
LINDSAY: But still, like, I want to pick up on gasoline prices because they have been a major driver of nominal sales. So, like, how much of the retail strength is simply energy price inflation rather than actually consumer demand?
RANDALL: Yeah, in this case, when we look at May, you know, about 70 per cent of the gain that we saw in the month of May was because of prices, and that’s largely dictated by the rise in gasoline prices in the month. But the fact that we still saw Canadians buying more goods in the month of May than they were in April, I think, you know, suggests that there’s a lot of strength under the hood for the Canadian consumer. And we look at back at what we’ve seen in the last few quarters. I mean, there’s a lot of discussion around two consecutive negative quarterly real GDP prints — Q4 of last year and the first quarter of this year. The Canadian consumer was the bright spot in both of those quarters as well. So, despite the fact that we have, you know, all of this uncertainty, weakness in the labour market, declining population in Canada, the Canadian consumer is still going strong.
LINDSAY: We saw volume sales rose for the first time in three months in this latest data that came out. Does this suggest household consumption is holding up better than expected as well?
RANDALL: Yeah, I would say so. I would say part of that is is, you know, we’ve seen the labour market improve in the second quarter, so I think that’s part of the story. But additionally, we’ve seen that the federal government has increased transfers to low- and middle-income households, and so that first one rolled out at the beginning of June. But in anticipation of that bigger cheque coming at the start of the month, no doubt that had some support in influencing consumption decisions by Canadian households. Certainly, we’re expecting that support to the strength that we see in the June flash number as well, and likely spilled over into the beginning of the third quarter too. And so, yeah, certainly, Canadian households, again, a bright spot in what is otherwise a pretty weak economic performance in Canada right now.
LINDSAY: And then I wonder what that does to confidence. Like, what does this data tell us about consumer confidence in Canada right now?
RANDALL: Yeah, I think consumer confidence is, you know, it’s pretty mixed in Canada right now. Certainly, when, you know, those cheques come through, or you have the World Cup leading to more spending at restaurants and that sort of thing, purchasing merchandise, obviously, you know, all of that suggests that the Canadian consumer is continuing to be very active. But it’s an environment of significant uncertainty, and we look at some of the surveys from the Bank of Canada or elsewhere. The Canadian consumer continues to have relatively weak sentiment and is not particularly optimistic about future prospects for things like employment and that sort of thing, relative to where we might have been back in, say, 2024, before all of the hullabaloo around tariffs and trade came about because of President Trump’s return to the White House. So, certainly, it’s an environment of less certainty, lower sentiment than we’ve seen in the past. But ultimately, the Canadian consumer continues to chug along and continues to spend in spite of all of this.
LINDSAY: And if we’re looking regionally, like, sales rose in every province except Nova Scotia. So, what regional dynamics are kind of shaping retail performance in different provinces right now that you’re seeing?
RANDALL: Yeah, overall, under the hood of the retail print today, not only did nine out of 10 provinces see gains, but every retail category saw gains in May as well. And so, suggest to us that, you know, overall, we’re just seeing broad-based strength across the country in terms of consumer activity. Now, again, a big chunk of that is coloured by gasoline prices. We’re not talking about volumes here. We’re talking about values, and so, ultimately, part of that is coloured by the higher gasoline prices. But generally, in spite of, you know, the problems in central Canada, being hit hard by tariffs — so, thinking steel, autos in Ontario, aluminum in Quebec, plus softwood lumber in B.C. — those provinces all saw gains in the month. So, overall, generally, again, relatively robust print given all of the circumstances impacting Canadian households. Right?
LINDSAY: Yeah, and then, always, when we see some of this data come out, we look at how this might affect the Bank of Canada moving forward. Do you think anything we’re seeing today will change the calculus at all for the Bank of Canada?
RANDALL: Well, I think it reinforces the tracking that the Bank of Canada has for the second quarter in their latest Monetary Policy Report. They said they expected growth to increase by two and a half per cent annualized in the second quarter. We’re now tracking around that same number, and given the strength in June retail sales, it seems like there’s a pretty strong handoff, or strong momentum, going into the third quarter as well. So, combined with all of those additional cheques going to households, our sense is that the consumer is going to show continued strength in the third quarter, and that’s going to help to boost GDP growth and ultimately demonstrate that the Bank of Canada is tracking is broadly online, and that its policy to keep rates where they are, given the current circumstances, is probably going to persist into the end of 2026.
LINDSAY: And then, just lastly, looking ahead to June as well, I wonder how much World Cup-related spending will really factor into the data we see next month.
RANDALL: Yeah, it’s going to be a big part of it. I mean, retail sales only gives us a sense of spending on goods, but ultimately, there was a lot of that in June, undoubtedly, and so, ultimately, some of that will come off in the month of July. We’re also seeing that gasoline prices are tracking much higher again on higher oil prices, given the erosion of the of the framework for a ceasefire in the Middle East, and so, ultimately, we’ll probably get another strong print in July. But that’s not going to be as strong in terms of volume terms, in terms of real activity. It’s going to be more a function of prices and more in line with maybe what we saw in the month of May, as opposed to what we’re expecting to see in June.
LINDSAY: Okay, Randall Bartlett, we will leave it there. Randall Bartlett, deputy chief economist at Desjardins Group. Really appreciate your time. Thanks for joining us.
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This BNN Bloomberg summary and transcript of the July 23, 2026 interview with Randall Bartlett are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
