January retail sales suggest Canadians have a holiday hangover

  • Retail sales spending (excluding autos) softened for a second consecutive month in January. Weakness in grocery spending and clothing sales more than offset gains in other categories like gasoline and furniture sales.
  • Canadians continued to consume fewer discretionary goods and pared back on discretionary services. Discretionary services spending has softened each month since September, other than in November before the holidays. Inflation-adjusted hotel spending has been trending lower ever since the summer travel boom ended. Restaurant spending has also cooled off following the lead-up to the holiday season.
  • Households pulled back from spending even more on discretionary goods—typically the first budget line item to be cut when households feel the pinch of higher debt payment obligations.
  • Aggregated consumer data understates how stretched Canadian households really are. Real per capita retail sales (excluding autos) have declined for six consecutive quarters as of Q4.
  • While households posted a surprisingly strong Q4 (spending likely kept real output growth in positive territory in Q4 led by a temporary rebound in services activity), this is not expected to last. If December and January are any indication, Canadian households are clamping down on spending. Retail activity is expected to be dormant in Q1 2024 and largely flat as households cool off from hefty pre-holiday spending when shoppers contended with higher price tags.





See the archived editions of the Consumer Spending Tracker here.

  • Purchases of physical merchandise (excluding motor vehicles) ticked lower in December, but were still up in a Q4 as a whole following gains in October and November.
  • Holiday spending on gifts through November and December was up just over 4% this year, slightly above the rate of inflation for November (prices were up just above 3% year-over-year)
  • In-person spending made a comeback this holiday season. More Canadians opted to peruse bricks and mortar stores with online purchase volumes growing more slowly in Q4.
  • Both discretionary goods and services sector spending ended the year on a softer note after ticking higher in October and November.
  • Home-related spending on furniture, home décor, and renovation supplies continued to dwindle with home resales. After home prices posted their largest month-over-month drop in nearly a year in November, homeowners opted to sit tight and forgo investing in home improvements.
  • Hotel spending was lower in Q4, but spending at restaurants ticked higher as Canadians prioritized dining out.
  • Our own cardholder data suggests that household spending remained relatively firm over the holidays, and with weaker inflation data in October and November implying the amount purchased increased (rather than just the amount paid.) Canadians continue to feel the squeeze of higher interest rates, but softer broader economic growth data (per-person GDP is on track to decline for a 6th consecutive quarter in Q4 2023) is bringing the Bank of Canada closer to a potential pivot to interest rate cuts, likely in the middle of the year in our own forecast.






  • Retail sales ticked up in November in the midst of the holiday shopping period. Even after adjusting for inflation, real retail sales (excluding autos) were tracking an increase relative to October. Clothing stores and gasoline were responsible for the bulk of the increase.
  • Canadians were out looking for deals on Black Friday- our own RBC cardholder data suggests holiday spending was up ~7% (from the eve of Black Friday through Cyber Monday) from year-ago levels.
  • In recent years, shoppers have devoted less of their Black Friday spending to electronics. Prior to the pandemic, nearly 13% of Black Friday weekend purchases were electronic goods. Today, electronics make up just 8.5%.
  • Canadians spent less on jewelry this year- swapping luxury gifts for necessities like clothing amidst higher household debt servicing costs.
  • Ahead of the holidays, restaurant spending ticked higher. But overall, real accommodation and food services spending is looking flat so far (on an annualized basis) in Q4.
  • And stronger travel spending in November signaled an uptick in travel bookings ahead of the holidays.
  • Q3 retail sales excluding autos came in softer than the prior quarter, down ~1.8% (annualized) after adjusting for inflation. So far, Q4 is looking slightly stronger.






  • Canadians swapped vacations and dinners out for gasoline and clothing purchases in October.
  • Spending on physical merchandise continues to show signs of slowing. Our tracking of retail sales excluding motor vehicles (and controlling for price changes) is down an annualized ~1.0% in Q3. October sales were slightly stronger as Canadians bought more gas and clothes. But most other spending categories were either weakly positive or outright declined.
  • Consumers are skipping weekend hotel reservations and date nights out, paring back spending on discretionary services. October marked the largest monthly decline in discretionary services sector spending in six months. Restaurant purchase volumes continued to fall alongside spending on hotels.
  • With continued cooling in Canada’s housing markets, home-related spending remains very weak as Canadians opt to stay put while the market thaws- avoiding renovations and hiring realtors.
  • Heading into Q4, we expect consumer activity to continue to soften. On a per capita basis, demand has declined since the second half of 2022. As cumulative mortgage servicing costs continue to mount and renewals rise, we expect Canadians will tighten their belts this holiday season.






  • September spending data suggests Canadians have begun to tighten their belts. Both nominal retail sales and inflation-adjusted retail spending (excluding auto sales) outright declined.
  • To-date, (nominal) September spending is trending positive in a few categories, including gasoline consumption, motor vehicle sales, and grocery spending, reflective of higher prices for essential goods.
  • Canadians are spending nearly 10% more on essential items than they were just one year ago. At the same time, the surge in discretionary spending has dissipated.
  • Restaurant spending fell for two consecutive months, as higher debt servicing costs means squeezed Canadians are eating at home more often.
  • Spending on travel pulled back in both August and September as foot traffic at airports plateaus after an early summer travel boom.
  • As the sun sets on the summer 2023 spending spree, Canadians have started to pare back. Consumer momentum has dissipated (as expected) as high rates hit home.





  • After posting an outright decline in Q2, retail sales growth (excluding autos) has been relatively flat in the first two months of Q3, according to our own tracking.
  • Real spending on groceries and gas was lower in August than in July. But there was an uptick in spending on clothing as back-to-school shopping ramped up and for many, return-to-office.
  • A softening in restaurant spending in Q2 is continuing into Q3. Nominal restaurant spending fell in August as Canadian restaurants seated fewer diners.
  • Canadians are spending less on hotels and restaurants in Q3 than Q2, signaling that Canadians are beginning to tighten their (travel) belts.
  • The consumer momentum witnessed earlier in the year has calmed down. We expect activity to moderate further in the months ahead as the impact of higher interest rates ripples through with a lag and labour markets show signs of softening.



  • Canadian spending showed signs of slowing in July. While retail sales excluding autos continued to rise, the pace was slower than in June.
  • Spending on discretionary services slipped a bit in July. The early summer travel boom is losing momentum with both real and nominal spending slightly below March peak levels.
  • Though restaurant spending has increased, this largely reflects higher prices rather than additional restaurant visits.
  • Spending remains firm, but early signs of softening are consistent with a drift higher in the unemployment rate. As we progress into the second half of the year, real consumption is expected to retreat as household debt servicing ratios climb to record highs.



RBC’s consumer spending tracking report uses RBC Data & Analytics’ proprietary database of anonymized card transactions by Canadian clients. The data are an accounting of merchant transactions that are divided into various spending categories covering tens of millions of weekly card transactions worth billions of dollars each week. Transactions, both in person and online, are classified into 11 broad spending groups: Dining, Education, Finances, Groceries, Health, Household, Shopping, Transport, Travel, Utilities, and Other. Within each group, the data are further classified: for example, shopping covers merchants classified as clothing stores, hobby shops, electronics stores, and jewelers, among others. We exclude purely financial transactions such as cash advances and insurance from spending.

We examined changes in the value of all transactions in these areas using a 7 day rolling sample starting January 1st of each year that is indexed to pre-covid levels which are calculated as the average spending for the month of February 2020. To examine the impact of seasonal factors, we also show each’s year spending profile which depicts monthly trends in spending. Online spending volumes are estimated based on the presence of an RBC card at the time of the authorization.

Protecting your privacy and safeguarding your personal information is a cornerstone of our organizational ethics and values and will always be one of our highest priorities. The underlying data for this analysis was aggregated based on transaction date, region and merchant category, and cannot be used to identify any individual client or merchant. For additional information please visit www.rbc.com/privacy.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.