OTTAWA--Canadian retail sales rose in May for a fifth straight month, pumped up by higher gasoline prices. An early estimate points to another retail-sales increase in June.

The report underscores how households are keeping the Canadian economy afloat, and helping drive a rebound that's expected to show solid growth in the second quarter.

The value of retail sales increased 1.0% in May to a seasonally adjusted 73.71 billion Canadian dollars, or the equivalent of $52.32 billion, Statistics Canada said Thursday. That matched market expectations. Core retail sales, which excludes the auto component and gasoline, climbed 0.9%, retracing a 0.7% decline in the category recorded in April.

In volume terms, retail sales climbed by a softer 0.3% in the month. Economists eye volume sales to gauge the level of activity in the economy.

The data-gathering agency's flash estimate for June indicates a 0.4% rise in total retail sales, marking a deceleration from May.

On a 12-month basis, nominal retail sales rose 5.9% in May. The data agency revised downward its initial retail sales estimate in April, to 0.4% from a previous 0.5% reading.

Consumer spending has proved to be a surprise source of strength for a struggling Canadian economy dealing with tepid hiring and business investment. Companies are on edge due to uncertainty in U.S. trade policy, highlighted by this week's threat from the White House to impose a 50% tariff on certain Canadian goods. The Bank of Canada expects consumption to be the biggest growth driver in 2026, offsetting weakness in housing, business investment and net trade.

"While U.S. trade policy continues to be a headwind, consumers have been resilient and businesses are adapting," Bank of Canada Gov. Tiff Macklem said last week, following the central bank's decision to keep its policy rate unchanged at 2.25%.

Retail sales are now up 5.2% since a most-recent low in September, and nearly 3% higher from the start of 2026.

On a nominal basis, retail sales increased in all nine categories tracked by Statistics Canada. Gasoline stations and fuel vendors led the way with a 3.1% rise, reflecting higher energy prices stemming from the Middle East conflict. On a volume basis, however, this category fell 2.7%.

The other solid contributor to nominal retail sales was the sporting goods and miscellaneous sector, up 1.8% in the month.

"Beyond the gas price increase, retail sales were solid in May, and a decent flash for June adds to the encouraging news," said Shelly Kaushik, economist at BMO Capital Markets. "The economy seemed to be building momentum in the second quarter, although additional challenges--more tariffs, extreme weather, and the renewed energy price shock--await in the second half of the year."

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

July 23, 2026 09:26 ET (13:26 GMT)

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