Retail sales increased 0.7 per cent in January to $35.7 billion, Statistics Canada said Friday.

Significantly higher prices at new car dealers and gasoline stations helped drive the gains, as in volume terms, sales were only 0.1 per cent higher.

Two shoppers browse an aisle inside a Wal-Mart Supercentre. Retail sales increased 0.7 per cent in January to $35.7 billion. (Ric Francis/Associated Press)

Stores selling home improvement products were also large contributors to the gain in January, as consumers scrambled to get under the federal government's deadline for the home renovation tax credit.

The gains were broad-based, as six of eight retail sectors were in positive territory.

The largest contributor to the overall increase was a 7.4 per cent rise at building and outdoor home supplies stores, the highest monthly growth rate for this type of store since August 2003 when a power blackout hit Ontario.

Sales at furniture, home furnishings and electronics stores were another driver, rising 2.5 per cent, mainly as a result of a 15.1 per cent gain at home furnishings stores, particularly those selling floor coverings. January's growth at home furnishings stores was the highest since the beginning of the series in 1991.

Regionally, seven of 10 provinces posted gains. The largest contributor to the national increase was Ontario, where sales rose 1.4 per cent after slight declines in the previous two months.

The highest growth rate among the provinces in January was a 2.1 per cent rise in Newfoundland and Labrador. January's rise offset declines in the previous two months.

Retail sales have been trending upwards since September, when the recovery from recession in Canada was beginning to take hold.