Canada October retail sales up 1.4% on gasoline, seen down 0.5% in November
Canadian retail sales rose by 1.4% in October from September, data showed on Tuesday, but an estimate for November indicates a 0.5% monthly decline heading into the Christmas shopping season and after seven interest rate increases this year.
October retail sales gained the most in five months, though it was a notch lower than the 1.5% rise forecast by analysts. September’s decline was revised downward a decimal point to 0.6% from a previously reported drop of 0.5%, Statistics Canada said.
October sales were driven mostly by price increases at gasoline stations and in food and beverage, Statistics Canada said. In volume terms, retail sales were flat.
“Retail sales posted a solid increase in October, though the gain came from higher prices, particularly at gasoline stations,” Shelly Kaushik, an economist at BMO Capital Markets, said in a note.
“Looking ahead, a negative flash estimate for November points to continued weakness as consumers struggle with reduced purchasing power in the face of high inflation,” Kaushik said.
The Bank of Canada has hiked rates at a record pace of 400 basis points in nine months to 4.25% – a level last seen in January 2008 – to tame inflation that stood at 6.9% in October. That is more than three times the central bank’s 2% target.
Going forward, bank Governor Tiff Macklem has said setting the policy rate will be more data-dependent. November consumer prices are due out on Wednesday, while October gross domestic product figures will be published on Friday.
“That latest retail data are consistent with the Bank of Canada pausing its hiking cycle in January,” said Royce Mendes, head of macro strategy at Desjardins Group, in a note. “That said, tomorrow’s CPI