(OTTAWA) Canadian retail sales fell 2.5% to $61.3 billion in July, Statistics Canada reported on Friday. They posted their first drop in seven months as sales at gas stations and clothing and accessories stores fell.
Updated 23.9
The decline was bigger than the federal agency’s preliminary estimate last month of a 2.0% decline, but its preliminary estimate for August now points to a 0.4% gain.
CIBC economist Karyne Charbonneau said retail sales have been more resilient than expected over the past two months due to high inflation, rising interest rates and higher consumption of services.
“The weaker-than-expected July data is finally providing a hint that the shift in consumer spending and the impact of higher interest rates are beginning to be felt,” said Ms.me Charbonneau in a report.
This is the type of data the Bank of Canada will be eyeing as it enters the final phase of its uptrend. We continue to expect another rate hike (by half a percentage point) in October before further signs of economic slowdown allow the bank to hold rate hikes on hold.
Karyne Charbonneau, economist at CIBC
The Bank of Canada raised interest rates by three quarters of a point to 3.25% earlier this month in a bid to control inflation. The central bank’s next rate decision is scheduled for October 26, when it will also provide an update on its outlook for the economy in its monetary policy report.
In its Friday report, Statistics Canada pointed out that July saw declines in nine of the 11 subsectors surveyed, which account for 94.5% of retail sales.
Gasoline sales at service stations fell 14.2% in July as gasoline prices fell 9.2% while sales volumes fell 7.0%.
Meanwhile, apparel and apparel accessories sales fell 3.3%. Sales at clothing stores fell 3.3% and shoe stores 6.5%, while jewelry, luggage and leather goods stores saw sales fall 0.6%.
The Miscellaneous Retail category, which includes pet stores, cannabis stores, and office supply and stationery stores, saw sales rise 0.7%.
Core retail sales, which exclude sales from service stations and auto and parts dealers, fell 0.9%, Statistics Canada said.
In terms of volume, retail sales fell 2.0% in July.
Retail sales fell in seven provinces in July. The largest decline was in Ontario, down 5.0%, mainly due to sales at gas stations. In Toronto, retail sales fell 5.7%.
Retail sales also fell 1.5% in Quebec. In the Montreal region, they fell by 2.3%.
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