Canadians continued to show a willingness to spend, according to retail sales data out on Tuesday, even as accelerating inflation erodes their purchasing power.
The nation’s retailers recorded a 0.9 per cent sales increase in April, Statistics Canada reported, driven primarily by higher volumes. In May, receipts were up 1.6 per cent, according to initial preliminary estimates also released on Tuesday.
The numbers suggest rising interest rates, higher inflation and slumping consumer confidence have yet to impact household spending in a major way. It’s a sign of resiliency that may only stoke expectations for further increases in borrowing costs by the Bank of Canada.
There may also be a reopening effect for the sector, after authorities lifted the bulk of COVID restrictions earlier this year.
The April gain was in line with economist expectations, though analysts expected a weaker increase in volumes. Excluding price increases, retail sales were up 0.9 per cent during the month.
The details in the report, however, were weaker than the headline numbers. Only six of 11 subsectors posted gains in April. Sales at new car dealerships continued to slump, while purchases at building material stories fell sharply in April — possibly reflecting falling activity in home sales.
General merchandise stores led increases in April, with a 4.2 per cent gain. Receipts at gasoline stations posted a 3 per cent increase, and were up 5.4 per cent in volume terms as prices temporarily dipped during the month.
The statistics agency didn’t provide sector breakdown of the May number.
Source: BNN Bloomberg