Canadian retail sales experienced a 0.1% drop to 66.08 billion Canadian dollars ($48.16 billion) in August, the first decline in five months, according to Statistics Canada. Despite this downturn, retail sales were still up by 1.6% compared to the same month last year. Preliminary data indicates that retail sales remained steady in September, with no significant changes reported.
The Canadian economy has been underperforming due to high inflation and elevated interest rates, which have negatively impacted demand. The Bank of Canada has kept its policy rate at a 22-year high of 5% following consecutive increases. A consumer survey revealed these rates have affected household purchase plans, with a decrease in planned major purchases requiring loans.
Despite positive sentiment regarding the job market, the cost of living remains a significant concern for Canadians. Sales at motor vehicle and parts dealers fell for a second consecutive month. However, this was counterbalanced by increased sales at gas stations and fuel vendors, which were driven by higher prices.
A port workers' strike also played a part in the weak retail sales performance in August. Core retail sales, which exclude gasoline stations and motor-vehicle and parts dealers, saw a fall of 0.3%. Sales of food and beverages, as well as sporting goods, books, and miscellaneous items also declined.
The industry-level gross domestic product (GDP) remained stable in July, with an early estimate indicating just 0.1% growth in August when manufacturing sales increased due to higher prices.
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