Retail Sales "Surprisingly Strong" To Start 2026, But "Won't Materially Change" RBC's GDP Tracking for Q1

09:16 AM EDT, 03/20/2026 (MT Newswires) -- According to Oskar Stone over at RBC, retail sales for the first two months of the year were "surprisingly strong", despite adverse weather conditions in parts of the country.

Stone noted headline retail sales rose 1.1% in January, with a rebound in auto sales an important catalyst. He noted even excluding autos, sales were up 0.8% with general merchandise retailers posting a strong reading. Stone said sales at these stores capture goods that would have helped Canadian dig themselves out after the snowstorms. He also noted total sales volumes also rose a "healthy" 1.0%.

On the outlook, Stone noted Statistics Canada's flash reading suggests that momentum continued in February with nominal retail sales likely up another 0.9%. With goods prices largely flat during the month, that suggests volumes were once again strong.

Stone said: "Given the job losses that occurred in the opening months of 2026, it appears that Canadians are diverting more money away from savings and towards spending. There is obviously a limit to how long that dynamic can continue. Moreover, consumers are now feeling the squeeze of higher gasoline prices, which could particularly weigh on discretionary spending in the coming months.

He added: "The latest retail sales data won't materially change our GDP tracking for Q1, which remains below the Bank of Canada's January forecast."

Before this release, Stone noted, Government of Canada yields were already up across the curve and market pricing had shifted to include two rate hikes from the Bank of Canada for this year. As a result, markets were little changed following the release, he said.

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