Data on Friday showed Canadian retail sales rose 0.7% in April as expected, bucking a downward trend over the past three months, with sales at the pump boosting the overall figure. Statistics Canada said retail sales, which includes cars, clothing, furniture, food and beverages and more, rose to C$66.8 billion ($48.78 billion) monthly. In terms of sales, overall sales grew 0.5% in April.
Statscan, which polled just half of the respondents, initially estimated retail sales could fall 0.6% in May. In addition to petrol pump sales, which rose 4.5% for the first time this year, sales at food and drink retailers also rose 1.9%, the data showed. Petrol pumps and food and beverage retailers accounted for 10% and 19% of total retail sales respectively.
Since the start of the year, Canada’s retail sector has been reeling from the highest interest rates in more than two decades, which has dented consumer spending. But economists had predicted sales would rebound in April due to higher gasoline and diesel prices, although consumer pressure remains. The Bank of Canada cut interest rates by 25 basis points to 4.75% for the first time in four years on June 5, and money markets raised expectations for another rate cut in July to about 73% from 71% before the release of retail sales data.
Economists say Canadian consumer prices continue to slow, and consumer price index (CPI) data due next week will provide clarity on whether the expected drop in retail sales in May is due to lower sales or lower prices. Core retail sales, which exclude sales at gasoline pumps and motor vehicle and parts dealers, rose 1.4% in April. Sales grew in seven of nine subsectors. The biggest sales declines were at auto and parts dealers, where sales fell 2.2% in April. Statscan data shows this sub-sector is the largest contributor, accounting for more than a quarter of total retail sales.
