Canada Retail Sales Research Brief
Inflation-Adjusted Retail Sales Stagnating,
Yet Retail Property Sector Remains Well Positioned
Excess demand is largely gone. Retail trade has remained resilient, despite the Bank of Canada undergoing one of its most aggressive tightening cycles in the country’s history. Total sales were up 2.7 per cent annually as of September, which, after accounting for inflation, translated into a 1.5 per cent gain. However, signs of moderation are emerging. Inflation-adjusted trade has contracted in three of the past four months, and core retail sales — which excludes gasoline and motor vehicle-related spending — fell 0.3 per cent monthly. Consequently, total sales volumes were down 2.3 per cent annualized in the third quarter, indicating that elevated interest rates are curbing household spending. Despite estimates pointing to a solid 0.8 per cent monthly jump in October retail sales, it appears excess demand is fading. Consumer confidence has slipped in recent months and unemployment continues to trend up, suggesting a limited scope for further growth over the remainder of the year.