Economists had expected a drop of 0.8 per cent, according to Thomson Reuters.
Statistics Canada said Wednesday the drop in January more than offset a gain in December as automotive-related sales plunged.
The motor vehicle and parts subsector fell 11.3 per cent to $9 billion as the group posted the largest decline in January.
Not including motor vehicles and parts, wholesale sales fell 1.3 per cent.
"The sharp decline in wholesaling, combined with the weak manufacturing figures yesterday, and pretty downbeat expectations for Friday's retail sales data, point to a slow start to the year for Canadian GDP," CIBC economist Andrew Grantham wrote in a note to clients.
Wholesale sales were down in five provinces — representing 67 per cent of total sales — with Ontario accounting for most of the decrease.
Sales were down 3.3 per cent in volume terms.
In addition to the automotive-related group, sales for the building material and supplies subsector dropped 5.3 per cent to $7.7 billion, the lowest level since May 2014.
Sales in the miscellaneous subsector also fell 2.7 per cent to $7.2 billion after five consecutive monthly gains. The farm product group dropped 8.6 per cent to $692 million.
Sales in the personal and household goods subsector and the machinery, equipment and supplies subsector were unchanged in January.
Food beverage and tobacco sales were up 0.9 per cent at $10.5 billion.