Falling gasoline prices pushed down Canadian retail sales for a second straight month in December, ending what was a weak fourth quarter and lackluster year for the industry.
Retailers posted a 0.1 per cent drop in receipts in December, extending a 0.9 per cent drop in November -- the most sluggish back-to-back monthly performance last year. For all of 2018, sales were up just 2.7 per cent, the weakest gain since 2015.
The weak performance to end the year underscores a broader trend of slowing consumption by households as they face rising borrowing costs, weakening housing markets and volatility in financial markets. It also highlights how the nation’s economy can’t rely as much on consumers to fuel new growth.
The Bank of Canada, which has raised interest rates five times since mid-2017, has said uncertainty over the impact of higher rates on household spending is one reason why it’s cautious in moving borrowing costs higher.
The 2.7 per cent increase in retail sales last year is less than half the 7.1 per cent gain in 2016.
During the last three months of 2018, retail sales fell 0.5 per cent from the previous three-month period.
There was some good news in the numbers. Outside of gas stations, retail sales in December were up 0.4 per cent, the biggest increase since May on a 1 per cent jump in car sales. In volume terms, retail sales were up 0.2 per cent.
The December decline was also less than the 0.3 per cent anticipated by economists.