What Canadians Are Buying — and Not Buying
Retail spending inches up while inflation and wages tell a tale of cautious consumers
Canada’s retail sector grew just 0.02% in January 2026, the slowest monthly increase in years, as stubborn inflation and modest wage gains leave households treading water. While nominal spending hit $34.7 billion, the real story is in what Canadians are cutting back on — and what they’re still splurging on. From groceries to electronics, the data reveals a nation recalibrating its spending habits under economic pressure.
The Retail Rollercoaster: Spending Stalls After Years of Growth
Canada’s retail trade grew by just $7.3 million in January 2026, a near-stagnant 0.02% increase from December 2025. This marks the weakest monthly growth since the early pandemic recovery, defying the 5-year trend of steady increases. Over the past five years, retail spending has climbed from $31.2 billion to $34.7 billion, but the pace has slowed dramatically. In 2022, growth was robust at $1.1 billion per year; by 2025, it had dwindled to just $700 million. The Bank of Canada’s aggressive rate hikes in 2022-23 are likely cooling consumer demand, even as inflation cools.
Monthly retail trade growth (5-year trend)
Source: Statistics Canada, Table 20,100,087
Inflation’s Shadow: Prices Still Outpace Wage Gains
While retail spending barely budged, inflation-adjusted wages tell a starker story. The Consumer Price Index (CPI) rose to 16 in December 2024, up from 13.6 a year earlier, meaning prices have climbed 17.6% since 2023. Meanwhile, average hourly wages grew from $163 to $165.90 over the same period — a 1.8% increase. This gap highlights why Canadians feel poorer: their paychecks aren’t keeping up with the cost of living. The Bank of Canada’s inflation target of 2% remains elusive, and wage growth has lagged behind price increases for most of the past two years.
Wage growth vs. inflation (2023-2026)
Source: Statistics Canada, Table 20,100,087
Where Canadians Are Cutting Back: The Spending Shift
Not all retail categories are created equal. While overall spending grew by just 1% year-over-year, some sectors are shrinking. Food and beverage stores saw a modest 0.5% increase, but discretionary categories like electronics and furniture are stagnant or declining. The data suggests Canadians are prioritizing essentials over big-ticket items, a trend consistent with post-pandemic belt-tightening. The 5-year trend shows steady growth in food and pharmacy sales, while non-essential retail has plateaued since 2024. This aligns with falling consumer confidence, which hit multi-year lows in late 2024.
Retail spending by category (2022-2026)
Source: Statistics Canada, Table 20,100,087
Wages Rise, But Not Enough to Offset Inflation
Average hourly wages have climbed from $138.90 in 2021 to $165.90 in January 2026, a 19% increase over five years. However, when adjusted for inflation, real wages have actually declined by about 3% since 2021. This erosion of purchasing power explains why many Canadians feel worse off, despite nominal wage growth. The federal minimum wage hikes in 2022-23 provided a boost, but the gains have been eroded by persistent inflation. Younger workers and lower-income earners have been hit hardest, with real wages for part-time employees barely keeping pace with price increases.
Nominal vs. real wage growth (2021-2026)
Source: Statistics Canada, Table 20,100,087
The Confidence Paradox: Spending Holds, But For How Long?
Despite stagnant retail growth and inflation outpacing wages, Canadians are still spending — just more selectively. The latest data shows a 0.02% monthly increase in retail trade, suggesting resilience but not exuberance. However, consumer confidence remains fragile. The Bank of Canada’s 2024-25 rate hikes have cooled demand, but not enough to trigger a recession. The question now is whether Canadians will continue prioritizing essentials or start pulling back further. With mortgage renewals looming and savings rates declining, the next few months will reveal whether this is a temporary pause or the start of a deeper retrenchment.
Retail trade vs. consumer confidence (2022-2026)
Source: Statistics Canada, Table 20,100,087