Canada’s Retail Sales YoY growth for November 2025 came in at 3.40%, according to the latest release from the Sigmanomics database. This figure undershot the consensus estimate of 3.20% and marked a sharp slowdown from October’s 4.90%. The deceleration follows a volatile year where retail sales peaked at 6.60% in August, reflecting strong consumer spending during summer months. The current reading signals a cooling phase in consumer demand, influenced by tighter financial conditions and evolving macro risks.

Drivers this month

• Shelter-related retail sales contributed positively but at a reduced pace compared to prior months.
• Automotive and used car sales showed marginal declines, subtracting approximately 0.10 percentage points from growth.
• Electronics and discretionary goods sales softened amid inflationary pressures.

Policy pulse

The 3.40% growth remains above the Bank of Canada’s inflation target range but signals a moderation consistent with the central bank’s tightening cycle. The slower retail sales growth aligns with recent rate hikes aimed at tempering demand and controlling inflation.

Market lens

Immediate reaction: The Canadian dollar (CADUSD) weakened 0.15% in the first hour post-release, while 2-year government bond yields edged down by 5 basis points, reflecting investor caution. Breakeven inflation rates remained stable, indicating steady inflation expectations despite the slowdown.

Retail sales are a core macroeconomic indicator reflecting consumer spending, which accounts for roughly 60% of Canada’s GDP. The November 2025 reading of 3.40% YoY growth contrasts with the 12-month average of 4.70%, underscoring a deceleration trend. This slowdown coincides with a broader cooling in household consumption and wage growth moderation.

Monetary Policy & Financial Conditions

The Bank of Canada has raised policy rates by 125 basis points since mid-2025, tightening credit conditions. Higher borrowing costs have dampened consumer credit growth, particularly impacting durable goods purchases. Mortgage rates have risen above 6%, reducing disposable income and curbing retail spending on home-related goods.

Fiscal Policy & Government Budget

Federal fiscal policy remains moderately expansionary, with targeted support for low-income households and infrastructure investments. However, no major stimulus packages have been introduced recently, limiting fiscal offsets to the monetary tightening. Provincial budgets are largely balanced, with some focus on healthcare and social services.

External Shocks & Geopolitical Risks

Global trade tensions, particularly between the US and China, have introduced uncertainty into supply chains. Energy price volatility and geopolitical risks in Eastern Europe also weigh on consumer confidence. These external shocks contribute to cautious spending behavior among Canadian households.

Drivers this month

• Shelter and food retail sales remained stable but contributed less to overall growth.
• Automotive sales contracted slightly, reflecting higher financing costs.
• Discretionary spending on electronics and apparel slowed amid inflation concerns.

Policy pulse

The data supports the Bank of Canada’s cautious stance, indicating that monetary tightening is beginning to temper consumer demand. Retail sales growth remains positive but is trending downward, consistent with the central bank’s inflation control objectives.

Market lens

Immediate reaction: The Canadian dollar weakened modestly, while short-term bond yields declined, signaling market expectations for a slower economic growth trajectory. Equity markets showed limited response, reflecting mixed investor sentiment.

Looking ahead, retail sales growth in Canada faces a complex mix of headwinds and potential supports. The baseline forecast anticipates continued moderation, with YoY growth stabilizing around 3.00% to 3.50% over the next quarter. This assumes steady monetary policy and no major fiscal stimulus.

Bullish scenario (20% probability)

• Improved global trade conditions and easing geopolitical tensions.
• Stronger wage growth and employment gains boost consumer spending.
• Fiscal stimulus measures targeted at households increase disposable income.

Base scenario (60% probability)

• Monetary policy remains restrictive but stable.
• Consumer demand grows modestly amid inflation easing.
• Retail sales growth hovers near current levels, supporting moderate GDP expansion.

Bearish scenario (20% probability)

• Further monetary tightening triggers sharper demand contraction.
• Geopolitical shocks disrupt supply chains and consumer confidence.
• Rising unemployment and credit stress depress retail sales below 2% YoY.

Canada’s November 2025 Retail Sales YoY data highlights a clear slowdown in consumer spending growth. This aligns with tighter monetary policy and external uncertainties. While growth remains positive, the deceleration signals caution for economic momentum and inflation pressures. Policymakers will monitor these trends closely to balance inflation control with growth support. Structural shifts toward digital commerce and service sectors continue to reshape retail dynamics, suggesting a gradual evolution rather than abrupt disruption.

Key Markets Likely to React to Retail Sales YoY

Retail sales data often influences currency, bond, and equity markets sensitive to consumer demand trends. The Canadian dollar (CADUSD) typically reacts to shifts in retail momentum, while short-term government bonds reflect monetary policy expectations. Consumer discretionary stocks and retail sector ETFs also track these trends closely. Additionally, crypto markets like Bitcoin (BTCUSD) may show indirect sensitivity through risk sentiment channels.

• CADUSD – Directly impacted by retail sales strength, influencing currency valuation.
• XRT – Retail ETF sensitive to consumer spending fluctuations.
• RY – Royal Bank of Canada, linked to consumer credit and spending.
• BTCUSD – Reflects broader risk sentiment influenced by economic data.
• SHOP – E-commerce leader, representing structural retail trends.

FAQs

What does the Retail Sales YoY figure indicate for Canada?

The Retail Sales YoY figure measures the annual growth in consumer spending, a key driver of Canada’s economic activity.

How does monetary policy affect retail sales?

Tighter monetary policy raises borrowing costs, reducing consumer credit and spending, which slows retail sales growth.

Why is retail sales data important for investors?

Retail sales data signals consumer demand trends, influencing currency, bond, and equity markets sensitive to economic growth.

Takeaway: Canada’s retail sales growth is cooling amid monetary tightening and external risks, signaling a cautious economic outlook but maintaining positive momentum.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 11/21/25