Swings in oil and gasoline prices cloud Canadian retail outlook

Despite the recent bounce in crude oil prices, the collapse in prices last autumn is still rippling through the retail environment this year through a slowdown in household income and a lower average price at the pumps. 

According to TD Economics, retail sales growth is expected to slow from 4.6% last year to 2.9% this year. As oil prices continue to grind higher into 2016, retail sales are expected to advance by a more normal 3.6% next year.

TD Economics forecasts gasoline prices are likely to average $1.09/L in 2015 and  $1.20/L in 2016 compared with $1.28/L in 2014. 

Due to this volatility in prices, gasoline stations are expected to record large sales swings which will drag down the overall retail sales performance this year and provide a boost the year after. As such, judging the overall sales performance from the headline retail sales growth rate will provide a misleading snapshot.