The sharp drop in retail sales volumes in January is not a major concern, coming off a massive GST holiday-driven surge the month before. The worry is that it could signal what's to come, with the preliminary estimate pointing further weakness in February, consistent with signs from the Bank of Canada’s recent consumer survey showing households raising their precautionary savings because of tariff-related uncertainty, while consumer confidence has collapsed. At the same time, however, the unseasonably severe weather this winter may also have played a role in the weakness.
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