Statistics Canada reported that retail sales increased by 0.5% in April, reaching $73 billion. The gain was largely driven by stronger spending at fuel retailers and motor vehicle dealerships.

Sales at gasoline stations and fuel vendors rose 5.1% during the month. After adjusting for price changes, sales volumes in this category increased by 0.8%.

The automotive sector also contributed to the overall growth. Sales among motor vehicle and parts dealers climbed 1.7%, supported by a 1.8% rise in new vehicle purchases and a 5.1% increase in used vehicle sales.

Despite the increase in dollar-value sales, overall retail sales volumes remained flat in April following a 0.7% decline in March.

According to BMO senior economist Shelly Kaushik, spending activity stabilized after a weak March, but elevated fuel costs continued to pressure household budgets and limit broader consumer spending.

Statistics Canada noted that five of the nine retail subsectors it monitors posted gains during the month.

When excluding gasoline stations, fuel vendors, and motor vehicle dealers, core retail sales declined by 0.7%. Food and beverage retailers recorded a 2.0% decrease, while general merchandise stores saw sales fall by 1.7%.

Other discretionary spending categories also showed weakness. Sales of sporting goods, hobby supplies, books, and musical instruments dropped 1.5%, marking a second consecutive monthly decline.

CIBC senior economist Andrew Grantham said the figures suggest that higher fuel prices reduced consumers’ capacity to spend on other goods and services during the spring months.

He added that softer consumer demand may make it more difficult for businesses to pass higher costs on to customers, reducing the likelihood that earlier increases in oil prices will lead to broader inflation pressures. Based on this outlook, Grantham expects the Bank of Canada to leave interest rates unchanged throughout 2026.

Kaushik believes consumer spending could improve later in the year as energy prices ease. She noted that lower fuel costs and a recent Middle East peace agreement may help support stronger economic growth during the second half of 2026.

Earlier this week, the United States and Iran reached a preliminary agreement aimed at ending hostilities and beginning a 60-day negotiation period focused on Iran’s nuclear program. The arrangement includes sanctions relief that allows Iran to export oil more freely and supports access through the Strait of Hormuz, a key route for global oil shipments. These developments have contributed to easing pressure on oil markets.

Looking ahead, Statistics Canada’s preliminary estimate indicates that retail sales may have increased by 1.0% in May, although the agency emphasized that the figure remains subject to revision.