Canadian retail sales growth set to slow in September after August rebound

Canadian retail sales are expected to have grown at a slower pace in September after rebounding sharply in August, offering the Bank of Canada a final reading on consumer demand ahead of its interest rate decision next week.

Retail sales likely rose 0.7% in September, according to an advance estimate from Statistics Canada, following a 1.2% increase in August. The August gain came after sales fell 0.8% in July, marking their first decline since December 2025.

The slowdown in September growth could signal some loss of momentum in consumer spending as renewed trade tensions with the United States cloud the economic outlook. Canada’s economy appeared to recover from a tariff-induced slump in the second quarter, but gross domestic product flattened in July and August.

The data will be among the final indicators available to Bank of Canada policymakers before next week’s rate decision. Market expectations have shifted in recent days, with traders and economists increasingly anticipating an interest rate hike. Overnight swap markets were pricing in a probability of more than 80% that the central bank would raise rates at the meeting.

August’s rebound was broad-based, with sales increasing across all nine retail subsectors. New car dealers recorded the largest increase, with sales rising 1.5% after falling 1.4% in July.

Excluding motor vehicles, retail sales climbed 1.2% in August, supported by higher sales at food and beverage retailers, which recorded their first increase in three months. Sales volumes also rose 1.2%, indicating that the rebound extended beyond price increases.

Provincially, retail sales increased in six provinces, led by Ontario, where sales rose 2.2%. Consumer spending in Toronto jumped 4% after falling 4.7% in July. Alberta recorded the largest decline, with sales edging down 0.1%.

Economists had warned that August’s recovery could prove temporary following an escalation in trade tensions with the United States in September. The latest figures will help policymakers assess the resilience of household demand as they weigh the inflation outlook against signs of a broader economic slowdown.