Key points

• Retail momentum is beginning to slow nationally, signaling weakness in the second half of the year.
• Alberta continues to lead the country in retail sales growth, supported by a resilient labour market.
• Growth in real per capita spending has picked up recently, but is expected to moderate next year.

Driven in part by a fast-growing population, consumer spending has for years been a key contributor to GDP growth in both Canada and Alberta, as an expanding consumer base naturally drives higher demand for goods and services. Now that population growth has slowed, consumer spending is facing new headwinds, placing greater focus on per capita demand to sustain momentum.

Today’s Twenty-Four examines the latest retail sales data through July to see how well consumer activity is holding up in the face of this demographic shift.

Slower population growth

Last week, Statistics Canada released its Q2 population estimates—alongside historical revisions to immigration figures—showing that annual national population growth has slowed to its lowest rate since 1915/16. Alberta also saw its population growth moderate from 4.7% in 2024 to 1.5% in 2026. This is still the fastest pace among the provinces.

Signs of consumer fatigue

After posting consecutive increases since January, Canada registered its first monthly drop in retail sales in July. Relative to the first seven months of last year, spending remained up 4.1% year-to-date (YTD).

The trend, however, is different  when we strip out the effects of inflation. On an inflation-adjusted basis, real retail sales were up by only 1.3% YTD—barely outpacing population growth and signaling that consumers are losing momentum under sustained cost-of-living pressures.

These results, which align with August's soft labour market report, further reinforce a third-quarter economic slowdown that matches both our latest outlook and the Bank of Canada’s expectations.

Alberta, with an assist from the labour market, is charting its own course in 2026

Alberta has led growth in retail sales among all provinces (slightly edging out P.E.I.) this year, up 7.6% YTD compared to the first seven months of 2025. In addition to faster population increases, solid labour market advances help explain this momentum.

Across Canada, retail sales growth closely mirrors employment trends. Alberta’s nation-leading retail performance is anchored by its strong labour market, which accounted for over 70% of national job growth through August. In contrast, provinces facing heavier impacts from U.S. tariffs, such as B.C., Ontario, and Quebec, have posted more modest retail spending increases this year.

On a per capita basis, some shine comes off

Across several sub-sectors, Alberta’s YTD retail sales performance has shown strong momentum. However, removing the effects of inflation and population growth presents a more nuanced picture.

Adjusted for inflation, retail sales have not kept pace with population growth in Canada, including in Alberta. Indeed, real per capita retail spending in Alberta has lost ground since 2023, hitting its lowest post-pandemic trough in Q3 2025.

However, there has been a bounce-back more recently, with this measure up 2.6% over the first half of the year, well-above the national average. This stronger pace of consumer spending is one reason we expect Alberta’s economy to outpace national GDP growth this year.  

Bottom line: Robust employment gains and more persistent population growth have propelled Alberta's retail sales momentum so far this year. However, pressures from rising energy costs as well as from new Canadian counter-tariffs on U.S. imports are mounting and are expected to add more strain on household budgets going forward.

Looking ahead, our forecast is for retail spending in Alberta to moderate to 4.4% next year before picking up to 5.1% in 2028 following an expected gain of 5.5% in 2026. 

Answer to the previous trivia question: Alberta welcomed, on a net basis, the most number of migrants (10,895) from Ontario last year.

Today’s trivia question: As of the latest quarterly data available (Q2 2026), which province has the highest retail sales per capita in Canada?

Looking closer to Alberta, nothing new was announced on the MOU between Alberta and Canada other than the fact that they continue to work towards implementation. Progress has been made on some elements, but the original April 1, 2026 deadline on carbon pricing and Pathways was not met.

The fiscal update addresses a major concern we’ve had: who is going to “build baby build”?  The reality is that there is already a shortage of tradespeople today and this is before the promised ramp-up in investment.

The federal government announced nearly $6 billion over five years to recruit, train, and hire up to 100,000 new Red Seal tradespeople by 2030-31, including grants to help offset the cost of training and hiring new apprentices. Financial support helps, but will it be enough to lure youth into the trades? Further, will it be enough to encourage retention given that many people who start these programs do not finish?

Bottom line: The right target is set: more investment is needed, and more workers are required to build these projects. But now we wait for execution and the needle to move on the chart above.

Answer to the previous trivia question: Approximately 13% of Indigenous-owned firms in Alberta operate in retail, as per the recent report From Readiness to Reach: Indigenous Trade, Partnership and Economic Growth in Alberta.

Today’s trivia question: Who was the Minister of Finance who oversaw the first federal budget in 1867?