Retail sales rose by 1.5% in March on the strength of a healthy auto sector, Statistics Canada said today.

Overall retail sales hit a record high of $32.1 billion in March.

The March increase in sales easily beat the 0.6% increase that economists had been expecting for the month.

Sales in the auto sector rebounded from a February decline, jumping 3.3% in March – the largest monthly increase since the incentive-driven peak of last summer.

Factoring out the auto sector (which includes sales of auto parts as well as new, used and recreational vehicles), retail sales rose by 0.7% from February, for a fourth consecutive monthly sales increase among non-auto retailers.

All retail sectors saw sales increases, except for the food and beverage sector, where sales slipped by 0.1% from February to March.

Sales at building and outdoor home supplies stores increased by 1.9%, while clothing and accessories stores rang up a monthly increase of 1.7%.

The strong retail sales could be more ammunition for the Bank of Canada to bump up interest rates again when it announces its next decision on May 24.

“The retail sales report and the view that Canada’s economic growth is running above its 2.9% long-term potential pace, pushes the odds back in favour of another hike,” said TD Bank economist Steve Chan.