Beware the Ides of March after Retail Sales Fall in February

Retail sales fell 0.2% in February, much less than anticipated by Statistics Canada or the consensus for forecasters. The decline in the month was entirely due to lower volumes, down 0.7%. In contrast, prices rose 0.5% in February. At the same time, core retail sales – purchases excluding gasoline stations and fuel vendors and motor vehicle and parts dealers – edged up 0.1% in the second month of 2023. Statistics Canada’s advance estimate of retail sales is pointing to a decline of 1.4% in March 2023. This would be the weakest print since last July. Taken together, this points to a series that is likely to continue to move lower. This will be music to the ears of Bank of Canada decisionmakers, and help to keep them on the sidelines for the foreseeable future.