Canadian retail sales unexpectedly increased in June, helped by higher auto sales, but the trend remained weak as elevated inflation and rising interest rates weighed on consumer spending..
Retail sales rose 0.2% in June from May, Statistics Canada said on Thursday, surpassing economists’ forecast for a 0.1% decline. Sales in May were revised up to a 0.5% increase from a previously reported 0.3% gain..
In volume terms, retail sales were up 0.3% in June from May..
Retail sales excluding autos decreased 0.2% in June from May, marking the third consecutive monthly decline. Sales at gasoline stations fell 2.3% as pump prices continued to retreat..
Meanwhile, sales at motor vehicle and parts dealers rose 2.9%, boosted by a 5.5% increase in sales at new car dealers..
Core retail sales, which exclude gasoline and motor vehicles and parts, were down 0.2% in June from May..
On a year-over-year basis, retail sales rose 3.2% in June, slowing from a 4.6% increase in May..
Retail sales in constant dollars edged up 0.4% in June from June 2022, a month when sales had increased 1.1% year-over-year..
The Bank of Canada has raised interest rates by 200 basis points since March to curb soaring inflation, which hit a four-decade high of 8.1% in June. The central bank is expected to deliver another hike at its next policy decision on September 7..
Higher interest rates are making it more expensive for consumers to finance purchases of big-ticket items, such as cars and homes..
The Canadian economy grew by a modest 0.8% in the second quarter, slowing from a 1.6% growth rate in the first quarter..
Retail sales are a key indicator of consumer spending, which accounts for about two-thirds of Canada’s economic activity..
On a provincial basis, retail sales rose in eight provinces in June, with the largest gains reported in British Columbia (+1.2%) and Nova Scotia (+1.1%). Sales declined in Newfoundland and Labrador (-1.1%) and Quebec (-0.3%)..
