RBC economists Rachel Battaglia and Abbey Xu reported that Canadian cardholder spending saw a modest improvement in February, despite ongoing reductions in discretionary goods purchases [1]. The core retail sales measure, calculated on a three-month average, remained slightly negative at -0.1%, but this represented an improvement from January's -0.3% (seasonally adjusted), suggesting that the decline in spending eased following weather-related disruptions and post-holiday fatigue in the previous month [1].
The contraction in February was attributed entirely to discretionary goods, with clothing and related retail segments identified as the weakest performers [1]. However, this weakness was partially offset by growth in discretionary services and essentials. Notably, travel, entertainment, and art categories posted the strongest gains on a three-month average, indicating continued resilience in experience-related spending [1].
Looking ahead, RBC expects that higher oil prices will drive up purchases at gas stations. The impact of these price increases on other essentials and discretionary spending remains uncertain, as it will depend on consumer decisions regarding income allocation and the extent to which they utilize their savings [1].
CONCLUSION
Canadian consumer spending showed tentative resilience in February, with modest improvement in cardholder activity and a slight easing in the decline of core retail sales. While discretionary goods remained weak, gains in services and essentials provided some offset. The outlook is mixed, as higher oil prices may influence future spending patterns depending on consumer behavior.