Retail sales fell 0.4 per cent to $70 billion in December as sales at new and used car dealers dropped, Statistics Canada said Friday.
However, the agency said its early estimate for January pointed to a gain of 1.5 per cent, though it cautioned the figure would be revised.
BMO senior economist Shelly Kaushik called the December results "a mixed bag."
"The declines were concentrated in limited sectors and volumes were unchanged," Kaushik wrote in a report.
"However, a solid flash estimate points to a rebound to start the new year. Ultimately, consumer spending is holding in despite ongoing economic uncertainty."
For December, Statistics Canada said sales were down in three of the nine subsectors it tracks.
The motor vehicle and parts dealers subsector posted a 1.6 per cent drop as sales at both new and used car dealers fell 1.8 per cent in December.
Core retail sales, which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers, fell 0.3 per cent in December.
Building material and garden equipment and supplies dealers fell four per cent in December after two consecutive monthly gains, while furniture, home furnishings, electronics and appliances retailers were down 1.7 per cent.
Sales at sporting goods, hobby, musical instrument, book, and miscellaneous retailers rose one per cent.
In volume terms, retail sales were unchanged in December.
The retail sales numbers come ahead of gross domestic product figures next week when Statistics Canada is expected to release its reading for the economy for December and the fourth quarter as a whole.
CIBC senior economist Andrew Grantham said the retail sales figures confirmed that consumer spending on goods will be a modest drag on GDP for the fourth quarter, although advances in November and January's flash estimate suggest that spending may be starting to move upward again.
"If that is the case, it justifies the current on-hold stance from the Bank of Canada, although we will need a few more months of data to confirm if this upwards trend will hold," Grantham wrote in a report.
This report by The Canadian Press was first published Feb. 20, 2026.
