In June, Canadian retail sales experienced a slight increase, driven primarily by strong car sales. However, other sectors showed signs of weakness as consumers exercised caution following the recent interest rate hikes by the central bank.
According to an advance estimate by Statistics Canada, sales in June reached a seasonally adjusted 65.92 billion Canadian dollars ($48.64 billion), representing a 0.1% increase from the previous month. This figure exceeded the agency’s preliminary estimate of flat sales and followed a similar 0.1% rise in May. Nevertheless, compared to the same period last year, sales were still 0.6% lower.
When accounting for price adjustments, retail sales saw a 0.2% decrease on a monthly basis. This suggests that volumes were lower during the month and could potentially impact the overall gross domestic product (GDP) of the industry.
Although price pressures for Canadian consumers have eased since their peak last summer, certain items, such as groceries, remain relatively expensive. The Bank of Canada has cautioned that the downward momentum in inflation has slowed. As a result, the central bank recently increased its policy rate by one-quarter percentage point in both June and July, bringing it to a 22-year high of 5%. This move indicates their determination to control inflation despite the potential impact on consumer spending.
Overall, while Canadian retail sales shows signs of growth in certain sectors, concerns over inflation and interest rate increases may continue to affect consumer behavior and industry-level GDP.
Retail Sales in Canada Remain Unchanged in Second Quarter
Retail sales in Canada for the second quarter of the year remained unchanged, according to data from Statistics Canada. In terms of volume, sales were down by 0.8%.
However, early indications from companies suggest that there was a 0.4% increase in retail sales in July. It is important to note that this figure is based on a survey response rate of about 45% and will be revised.
In June, Canadians spent more on new cars, with sales for the third consecutive month. Although sales were also up at used-car dealers, the overall effect was offset by lower sales at automotive parts, accessories, and tire stores. Gasoline stations and fuel vendors saw an increase in sales due to higher pump prices.
Excluding gas stations and motor-vehicle and parts dealers, core retail sales in Canada witnessed a decline of 0.9% from May.
The most significant drops in sales were observed at general merchandise stores and food and beverage retailers, particularly in beer, wine, and liquor sales. Supermarkets and grocery stores also experienced a setback in June, with a 0.4% decrease following six months of consecutive growth.