Canada's retail sales saw a boost for the third straight month in June, as consumers flocked to car dealerships to take advantage of big discounts, according to Statistics Canada.

Retail sales in June saw an increase of 0.7 per cent from May, for a total of $37.8 billion. Without vehicle and auto-parts purchases, retail sales would have fallen by 0.1 per cent.

Economist David Madani of Capital Economics said that a sustained rebound in the volume of retail sales may have to wait due to renewed financial market volatility and losses in consumer confidence.

"The good news is that unemployment and labour income growth appear to be holding up for now," he told The Canadian Press. "Rising food prices and high fuel costs, however, will continue to squeeze real disposable incomes and spending this year."

Statistics Canada said retail sales rose in seven provinces in June, with Quebec's growth of 1.5 per cent accounting for almost half of the national sales gain. The largest decline was in Alberta, where sales fell 0.3 per cent.

Benjamin Reitzes, the Bank of Montreal's senior economist, told The Canadian Press that gains in auto sales were the result of significant discounting by dealerships.

"Clearly that's not a sustainable tread, but underlying sales climbed for a second straight month, suggesting Canadian households haven't thrown in the towel yet," he said.

Sales at new-car dealers grew by 3.3 per cent and sales at used-car dealers rose 10.4 per cent in June.

Automotive parts, accessories and tire stores showed gains of 1.1 per cent, while "other motor vehicle dealers" gained 3.4 per cent.

Reitzes said the bank still expects cautious spending to continue because of negative global economic news and higher household debt levels.

Last week, Bank of Canada governor Mark Carney said that the Canadian economy grew less than expected in the second quarter and warned the weaker-than-expected recovery in the U.S would also slow growth.

Interest rates are not expected to be raised by the central bank until sometime in 2012.

Sporting goods and book stores saw the largest jump outside of motor vehicles with sales up 1.9 per cent. Building material, garden equipment and supplies dealers saw a rise in sales of 2.1 per cent.

Food and beverage stores rose only 0.3 per cent and sales at supermarkets and other grocery stores gained 0.4 per cent.

With files from The Canadian Press