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Florence Jean-Jacobs
Principal Economist
Economic News
Canada: Retail Sales Rose in October, Despite Falling Prices
December 21, 2023
Highlights
- Canadian retail sales increased for a second consecutive month, up 0.7% m/m in October. This was in line with Statistics Canada’s earlier flash estimate and the consensus of economic forecasters (0.8%). The table below summarizes key data points.
- The strength in the headline number was supported by a 1.1% advance in sales at motor vehicle and parts dealers. But with the price at the pump down sharply in the month, nominal sales at gasoline stations dropped 3.1% in October despite an increase in volumes. Excluding these series, core retail sales moved 1.2% higher, on broad-based strength.
- In all, real purchases posted a solid 1.4% gain, while retail prices dropped by 0.7% in October.
- Alberta was the only province experiencing a decline in sales (-0.2%).
- Statistics Canada’s flash estimate for November nominal retail sales points to a flat print (graph).
Implications
After accounting for today's retail and employment (SEPH) releases for October, our tracking suggests there may be virtually no growth in Q4. Accordingly, we still expect the Bank of Canada's next move to be a rate cut by mid-2024.
In all, decelerating inflation and a weakening labour market suggest that rate hikes are making their way into the broader economy. We therefore expect spending on interest-rate sensitive durables and discretionary categories of goods and services to be subdued in the coming months, as consumer surveys suggest. (For more details, see our latest Economic and Financial Outlook External link. This link will open in a new window.).