(OTTAWA) Canadian retail sales fell 2.5% to $61.3 billion in July, Statistics Canada reported Friday. They recorded their first decline in seven months, as sales at gas stations and clothing and accessories stores fell.
Updated yesterday at 1:44 p.m.
The drop was larger than the federal agency’s preliminary estimate last month of a 2.0% decline, but its initial estimate for August now points to a gain of 0. .4%.
CIBC economist Karyne Charbonneau said retail sales had been more resilient than expected over the past two months due to high inflation, rising interest rates and a towards the consumption of services.
“The weaker-than-expected July data finally provides some indication that the shift away from consumption of goods and the impact of higher rates is beginning to materialize more meaningfully,” Ms.me Charbonneau in a report.
This is the type of data the Bank of Canada will be eyeing as it enters what should be the final leg of its bullish cycle. We continue to expect another (half a percentage point) rate hike in October, before further evidence of an economic slowdown allows the bank to suspend rate hikes.
Karyne Charbonneau, Economist at CIBC
The Bank of Canada raised its key rate by three-quarters of a percentage point to 3.25% earlier this month in its fight to control inflation. The central bank’s next interest rate decision is scheduled for October 26, when it will also release an update to its outlook for the economy in its monetary policy report.
In its Friday report, Statistics Canada pointed out that declines were noted in July in nine of the eleven sub-sectors it studies, representing 94.5% of retail trade.
Gasoline sales at gasoline stations fell 14.2% in July, as gasoline prices fell 9.2% while sales volumes fell 7.0%.
Meanwhile, sales of apparel and clothing accessories fell 3.3%. Clothing store sales fell 3.3% and shoe store sales fell 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 gas stations and motor vehicle and parts dealers, fell 0.9%, Statistics Canada said.
Expressed in volume terms, retail sales fell 2.0% in July.
Retail sales fell in seven provinces in July. The largest decline, at 5.0%, was observed in Ontario, and was mainly due to sales at gasoline stations. In Toronto, retail sales fell 5.7%.
Retail sales also fell in Quebec, by 1.5%. In the Montreal region, they fell by 2.3%.