06:58 AM EDT, 10/24/2025 (MT Newswires) -- Canadian retail sales jumped 1% month over month in August in both nominal and real terms, said Bank of Montreal (BMO).

Despite that decent print, sales have been "choppy" in recent years, noted the bank.

The previous inflation spike and resulting monetary tightening, the soft labor market, and trade and economic uncertainty have all weighed heavily on consumers, pointed out BMO.

Removing the significant price swings, it's clear that real spending has struggled to gain traction even after interest rates began to fall -- sales volumes have edged up just 0.3% in the past six months, stated the bank.

To highlight that point: the September flash estimate calls for a 0.7% month-over-month decline in nominal spending, which could lead to volumes dropping more than 1% after accounting for the increase in goods prices.

Ultimately, it's the weak outlook for economic growth -- and further downside risks -- driving the Bank of Canada's dovish stance, according to BMO.

The bank doesn't expect that to change anytime soon and continue to expect a further BoC 50 bps of easing in the pipeline.