Author: Promit Mukherjee and Dale Smith
OTTAWA (Reuters) – Canadian retail sales rose 0.7% in April as expected, data showed on Friday, reversing a downward trend over the past three months, as sales at gasoline pumps boosted the overall figure.
Statistics Canada said retail sales (including cars, clothing, furniture, food and beverages, etc.) increased to C$66.8 billion (C$48.78 billion) monthly.
In terms of sales volume, overall sales increased by 0.5% in April.
Statscan conducted a preliminary survey of only half of the respondents and initially estimated that retail sales may fall by 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.
“Looking at the monthly moves, spending growth remains weak amid rising interest rates and inflation,” BMO Capital Markets economist Shelly Kaushik wrote in a note.
“There should be a recovery in the coming quarters as interest rates start to come down significantly,” she said.
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 the money market raised expectations of another interest rate cut in July from 71% before the release of retail sales data to about 73%.
Economists say consumer prices in Canada continue to slow, and consumer price index (CPI) data released next week will clarify 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 decline was at automobile 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.
(1 USD = 1.3694 Canadian dollars)
