Retail spending in Canada showed early signs of a slowdown just as the holiday shopping season ramped up this fall, according to new figures from Statistics Canada released Tuesday.
Preliminary numbers for November suggest a pullback in retail sales, the federal agency said.
The reading came as higher prices for basics like gas and food helped boost retail sales 1.4 per cent to $62.0 billion in October. However, overall retail spending was unchanged in volume terms for the month.
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The data points to “a continuation of the stagnant trend that has persisted throughout this year,” CIBC Capital Markets senior economist Andrew Grantham said in a client note.
Statistics Canada’s early figures for November indicated a weakening of spending on goods – despite Black Friday sales sweeping stores at the end of the month.
The agency’s preliminary estimate pointed to a 0.5 per cent drop in retail sales last month, but cautioned the figure would be revised.
The numbers suggest goods spending “is going nowhere fast, with inflation and higher interest rates denting households’ desire and ability to increase spending volumes,” Grantham said.
While spending on services is expected to be a small bright spot in the last quarter of 2022, even that could fade in the new year, he added.
“As we move into 2023 and higher interest rates start to impact a greater proportion of households, even services spending could begin to struggle,” Grantham said.
For October, higher prices boosted sales at gasoline stations by 6.8 per cent, but gas station sales in volume terms fell 3.3 per cent.
Sales at food and beverage stores rose 2.2 per cent, led higher by supermarkets and other grocery stores, which gained 2.5 per cent.
Core retail sales in October – which exclude gasoline stations and motor vehicle and parts dealers – rose 0.9 per cent.
Meanwhile, sales on more discretionary items appeared to slow.
Sales at furniture and home furnishings stores dropped one per cent in October compared with the previous month.
Electronics and appliance stores recorded a 0.9 per cent decline in sales, clothing and clothing accessories stores saw sales fall 0.6 per cent and sales at sporting goods, hobby, book and music stores were down 0.5 per cent, Statistics Canada said.