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Special Report

Canada Retail Sales Research Brief

October 2023

Consumption Continues to Stagnate, Boosting
Likelihood that Interest Rate Hikes are Finished

Retail sales holding, but signs of easing ahead. Canada’s retail sales were up 1.6 per cent annually in August, as households continued to absorb elevated borrowing costs better than expected. Despite consumers having lower real disposable incomes, Canada’s retail property sector continues to show healthy performance. Limited new supply and elevated population growth amid record immigration are acting as a backstop to a slowing economy, and are expected to support retail property fundamentals over the coming year. However, signs of a potential short-term slowdown are beginning to materialize. Retail sales fell 0.1 per cent on a monthly basis, and after accounting for inflation, total sales volumes have declined for four consecutive periods. Additionally, on a per capita basis, annual inflation-adjusted retail sales have trended down for four consecutive quarters. With interest rates expected to remain elevated heading into 2024, further softening may be ahead as more households renew mortgages and have higher debt servicing liabilities.

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