Another chance the Bank of Canada will hike again is greater than expected: Currency analyst
Canadian consumers appear to be quickly rolling back their spending as the Bank of Canada’s higher interest rates start to bite into more household budgets.
Receipts for retailers dropped 0.3 per cent in August, the first decline since March, according to an advance estimate from Statistics Canada released Friday. That followed a 0.3 per cent increase a month earlier, which missed the median estimate of 0.4 per cent in a Bloomberg survey.
Sales rose in seven of the nine subsectors in July, and were led by increases at food and beverage retailers. Motor vehicle and parts dealers saw the largest decrease that month, and fell for the first time in four months. Excluding autos, retail sales rose one per cent, double the expectations.
In volume terms, retail sales edged down 0.2 per cent in July.
The report suggests Canadians are tightening their purse strings as more households face mortgage payment renewals and high gas prices. The Bank of Canada held borrowing costs steady on Sept. 6, saying recent evidence showed higher rates are working to slow the economy and consumption.
Strength in household spending earlier this year prompted policymakers to resume raising interest rates in June and July after a five-month pause. The central bank’s next rate decision is due on Oct. 25, and most economists in a Bloomberg survey expect the bank to hold again.
Regionally, sales rose in five provinces in July, led by higher sales in Quebec and British Columbia. Ontario saw the largest provincial decrease, driven by lower sales at motor vehicle and parts dealers.
About 17 per cent of Canadian retailers said the strike at British Columbia ports in July affected their business activities, the statistics agency said. On an unadjusted basis, the largest estimated impact on sales in dollar terms were at motor vehicle and parts dealers.
The statistics agency didn’t provide details on the August estimate, which was based on responses from 49.2 per cent of companies surveyed.
--With assistance from Erik Hertzberg.