Canada’s retail sales declined in June, according to data released recently, as consumers, impacted by high interest rates, reduced their spending on non-essential items.
Retail sales, which include apparel sales, fell by 0.3 per cent month-over-month, a smaller decline compared to the 0.8 per cent drop observed in the previous month. Analysts had anticipated a 0.3 per cent decline in June, with a forecasted 0.2 per cent drop when excluding automotive and parts sales.
Preliminary estimates for July, based on a partial survey of respondents, suggest that retail sales likely grew by 0.6 per cent, according to a flash estimate from Statistics Canada.
The Bank of Canada reduced its key policy rate for the second consecutive time in July, lowering it to 4.5 per cent, after maintaining it at its highest level in over 23 years for a year.
These elevated rates have dampened consumer spending, business investments, and economic growth, though they have also contributed to easing consumer prices.
At the Bank of Canada’s most recent monetary policy meeting, Governor Tiff Macklem indicated a potential shift in the bank’s focus toward stimulating economic growth rather than solely combating inflation.
Statistics Canada is set to release GDP figures for June and the second quarter next week, which will be the last significant data before the bank’s next monetary policy decision on September 4.
Retail sales amounted to C$ 65.73 billion (US $ 48.39 billion) in June, with declines in four out of nine subsectors. In volume terms, sales saw a slight increase of 0.1 per cent for the month.
