Core retail sales in Canada increased by 0.4% in August. However, the overall figure dropped by 2.2% because of lower gasoline prices, which influenced the final result. Spending on clothing and in the arts and entertainment sectors went up, while spending on household and construction items saw a small decrease. Grocery store spending has stayed the same since May.

Canadian Economic Outlook

An economist at RBC mentioned that the rise in core sales fits with Canada’s overall economic picture. Despite a GDP decline in the second quarter, slow, steady growth is expected, supported by consumer spending that helps balance challenges in the industrial sector. The latest data from cardholders in August 2025 shows Canadian consumers are stronger than the main numbers suggest. Although falling gas prices lowered the overall figure, core spending on clothes and entertainment actually grew. This strength indicates a surprisingly strong economy. This resilience follows a slight GDP contraction in the second quarter, so the positive consumer activity might delay any interest rate cuts from the Bank of Canada. A recent report from Statistics Canada shows core inflation stuck at 2.8%, which is well above the central bank’s target. This strong spending data makes it more likely that the Bank will maintain its current stance.

Investment Opportunities

For derivatives traders, this signals renewed strength in the Canadian dollar. Consider taking long positions on the loonie, possibly through call options on CAD/USD, as the currency remains strong even with WTI crude prices below $80 a barrel. The market might be underestimating the Canadian economy’s resilience. We saw a similar trend in late 2023, where a strong consumer base helped the economy avoid a predicted recession, keeping the Bank of Canada alert. That period ultimately supported the loonie against other currencies. History shows that it’s risky to bet against the Canadian consumer in these situations. This breakdown of spending also opens opportunities in equity derivatives. The growth in arts and entertainment spending points to strength in consumer discretionary sectors, making call options on related ETFs appealing. On the other hand, the decline in household and construction spending might require protective put strategies on housing-related stocks. Create your live VT Markets account and start trading now.

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