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Special Report

Canada Retail Sales Research Brief

October 2022

Elevated Interest Rates Not Having a Major
Impact on Household Spending

Consumption activity rebounds after first monthly decline. Retail sales in August tracked upward by 0.7 per cent month-over-month, which comes after a 2.2 per cent drop in July — the first decline since interest rates began to rise. Retail sales are now up 19 per cent since January 2020 and 6.6 per cent year-to-date. This uptick in August suggests that elevated prices and interest rates have yet to significantly impact household spending activity. This could partially be attributed to Canada’s relatively healthy labour market, which has added roughly 172,000 jobs this year as of September. While this is positive in terms of GDP growth and the potential for a soft landing, it further solidifies that the Bank of Canada will continue its hawkish approach to monetary policy. Some broad-based indicators of slower inflation are emerging, however, with shipping rates lowering, commodity prices declining and supply chains re-establishing. 

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