While Canadian retail sales are increasing at nearly record-breaking levels, observers ought to be cautious not to overhype the surge, according to the latest analysis of Statistics Canada data from consultant Ed Strapagiel.

Though retail sales have spiked by 34.9% year-over-year in the three-month period ending in May, Strapagiel says that the increase has less to do with how good things are this year as how bad they were in that same period in 2020 amid the onset of the COVID-19 pandemic and associated lockdowns.

The recovery is being led by the store merchandise and automotive and related sectors, the former of which has seen a 36.1% year-over-year surge in the three-month period. Store merchandise was one of the sectors hit hardest by the pandemic and the closure of non-essential retail stores and malls, and the market has also adjusted with e-commerce sales, curbside pickup models, and home delivery.

Within the store merchandise category, clothing and accessories saw a tremendous 122.2% surge, furniture and home furnishings gained 83.8% and sporting goods, hobby, book and music stores all saw a 69.3% increase.

Automotive and related, meanwhile, climbed 78.6% in the same three-month period, though Strapagiel says the increase is almost entirely a correction following the deep declines a year ago, and that the sector is now returning to pre-pandemic sales levels.

New car dealers led the recovery with a 100.2% increase, while used and other car dealers were up 89.7%. Gas station sales climbed 44.8% as pump prices rose and people found more reasons to drive again with the lifting of restrictions.

Food and drug was the largest drag on the numbers, with only a 0.8% increase on sales in the three months ending in May over that same period in 2020. Strapagiel attributes this to a return to more normal conditions for the sector, which had a boom in sales during this period last year.

Supermarket and grocery stores, which comprise just over half of the sector, saw a decline of 5.5% in the same period, slightly offset by specialty food stores (11.3% increase) and health and personal care stores (12.7% increase).

E-commerce growth is cooling from their 2020 surge, but they were still up 19.6% in that three-month period ending in May – “things seem to be getting back to normal,” according to Strapagiel.