Canada: Solid Retail Sales in August Aren’t Likely to Last

Retail sales increased by a consensus-beating 0.7% in August, as a 1.1% surge in volumes trumped a retreat in retail prices in the month. Sales were up in 6 of 11 subsectors, led by gains at food and beverage stores (2.4%) and motor vehicle and parts dealers (0.6%). But this good news didn’t seem to last. With Statistics Canada’s flash estimate pointing to a 0.5% decline in nominal retail sales in September and seasonally-adjusted goods prices being flat on the month according to the CPI, Q3 looks to have ended on a sour note. Indeed, this points to a substantial contraction in retail sales volumes in Q3 of more than 4% annualized.