Foot on the gas: Retail spending trends through May

According to the Bank of Canada’s most recent Survey of Consumer Expectations, heightened anxiety over the cost of living continues to weigh heavily on Canadian consumers, with the ongoing conflict in the Middle East projected to exacerbate these pressures. Despite these challenges, retail store sales have demonstrated remarkable resilience since the beginning of the year, particularly in Alberta.

In this Twenty-Four, we examine the latest retail sales data to identify some key sub-sectors driving this growth and analyze the underlying price effects.

Gasoline prices a key driver of increases

At a national level, retail sales* in May grew by 1% over April, and were up 5.9% compared to May of last year. Gasoline stations accounted for a significant portion (41%) of this year-over-year (y/y) growth. Given that the volume of gasoline station purchases pulled back by 7.6% y/y, the gain in revenues was entirely due to escalating fuel costs, which surged 33% as a direct consequence of geopolitical tensions in Iran.

The encouraging figures in May pushed up year-to-date (YTD) retail sales by 3.6% relative to the first five months of 2025. This momentum is expected to persist, supported by preliminary projections from Statistics Canada indicating a further 0.4% month-over-month uptick in June.

While the resiliency in consumer spending is reassuring, we have long cautioned that this momentum will be difficult to sustain given rising energy costs and slowing population. More of the growth in Canada’s economy will need to come from investment and exports.

Alberta sales still running fastest in the country

Retail sales in Alberta kicked off 2026 with renewed strength after a slower conclusion to 2025, marking the fifth consecutive monthly gain in May. Consequently, the province experienced a 7.2% YTD surge compared to the corresponding period in 2025. This growth rate stands out as the fastest among all provinces, expanding at twice the country's pace during the same timeframe.

Alberta’s robust performance so far this year has been surprising given the headwinds noted above, and can be attributed to faster population expansion, a strengthening job market, and shifting travel preferences. However, maintaining this upward trajectory will likely prove challenging, given cooling population inflows and cost-of-living pressures.

Broad-based gains in Alberta

Retail sales growth at gasoline stations in Alberta mirrored national trends and reached a four-year peak in May. Yet, what sets Alberta apart from the rest of Canada’s retail market is the broad-based nature of its expansion.

Consider motor vehicle and parts dealerships: while their sales across the nation barely exceeded previous annual benchmarks, they experienced a robust 8.8% YTD surge in Alberta, driven by new car dealerships. Overall, Alberta has outperformed national increases in six out of nine major retail sub-sectors so far this year.

This momentum pushed core retail sales—which omit motor vehicles and gasoline—up by 5.4% through May, marking the most rapid acceleration recorded in three years.

Strength beyond prices

It is easy to assume that retail sales have simply been driven by higher prices. This is not the case. When adjusted** for inflation, real retail spending in Alberta grew by 4.3% YTD, substantially outperforming the 0.9% increase recorded across Canada as a whole. Factoring in faster population growth***, Alberta still outperforms, though by a smaller margin.

Although volumetric estimates are not available at the provincial level, national trends suggest that real sales volumes have expanded across the majority of Alberta's sub-sectors. One notable exception is a decline in grocery store sales volumes. This could be a reflection of a shift in consumer habits, as many Albertans are choosing to dine out/order in. This trend is supported by provincial restaurant and bar sales, which have consistently outpaced grocery sales since COVID times.  

Looking ahead

Gasoline station revenues will ebb and flow with volatile fuel prices. Having said that, our in-house ATB consumer Mastercard transaction data suggests that consumer spending (outside of autos) in Alberta remained steady in June even as gasoline prices declined, relatively in line with the slight increase noted in Statistics Canada’s advance national estimate.

Despite growing anxieties about the cost of living, consumer activity in Alberta has exceeded expectations during the initial months of this year. If momentum continues, it provides modest upside to our latest quarterly outlook, which anticipates only a 4.5% rise in retail sales for this year. That number is now looking too conservative.

*All monthly data in this report has been adjusted for seasonal fluctuations.
**Deflated by national retail price indices.
***Using the latest population estimates as of April 1.

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