Retail sales in Canada declined in the third quarter of the year after weakness in September, as gasoline prices fell sharply and retail sales declined for the month amid sharp price inflation.
Sales declined 0.5% in September to 61.14 billion Canadian dollars, equivalent to about $45.45 billion, Statistics Canada reported on Tuesday. The drop was in line with market expectations, according to economists at TD Securities, and matched Statistics Canada's preliminary estimate given last month.
For the third quarter, retail sales fell 1%, the first quarterly decline since sales fell 11.9% in the second quarter of 2020 when the Covid-19 outbreak significantly disrupted business and spending. The statistics agency said preliminary indications from companies suggested retail sales rose again in October, up 1.5%, although the figure was an unofficial estimate and would be revised.
Canada's core retail sales, which exclude gas stations and motor vehicle and parts dealers, fell 0.4% from August, Statistics Canada said.
Canada's central bank has raised rates by 3.5 percentage points so far this year in an effort to drive annual inflation down from the current rate of 6.9% to a target of 2%. Bank of Canada Governor Tiff Macklem said interest rates are likely to rise further, although the bank is prepared to slow the rate of monetary tightening given that rate hikes so far have affected several areas of the economy such as housing and manufacturing and gross domestic product is expected to stall until mid-2023.
Inflation in Canada has proven to remain a concern, with data last week showing annual consumer price inflation held steady in October, as economists expected, after energy prices surged but retail prices posted their first month-on-month decline since June.
