Here’s where Canadians are spending less amid high inflation, interest rates – National | 24CA News
Canadian shoppers are pulling again on spending as rising costs and excessive rates of interest seem like taking a toll on retail gross sales.
Retail gross sales slipped 0.2 per cent to $66.3 billion in February amid a drop in spending at normal merchandise shops and gasoline stations and gas distributors, Statistics Canada mentioned Friday.
The early estimate for March additionally factors to a good steeper decline of 1.4 per cent, although the company cautioned the determine could be revised.
“We’re starting to see consumers tighten their belts,” retail analyst Bruce Winder mentioned. “Canadian consumers are incredibly cautious right now.”
Economists have warned of a lag between rising costs and excessive rates of interest and the have an effect on on the financial system. While the Bank of Canada held its key lending fee at 4.50 per cent at its most up-to-date fee resolution, it’s up from 0.25 per cent at first of 2022.
“It is clear that consumer spending behaviour has been impacted by the rapid rise in interest rates even as the economy as a whole has generally outperformed expectations,” Andrew Grantham, senior economist with CIBC Capital Markets, mentioned in a consumer word.
Still, the pull again in shopper spending may assist ease inflation even additional, he mentioned.
“This sluggishness in spending should help keep goods price inflation under control (assuming supply chain issues don’t worsen again), allowing the Bank of Canada to stay on hold for the remainder of this year before gradual cuts start early in 2024,” Grantham mentioned.
The annual fee of inflation in Canada dropped to 4.3 per cent in March, however grocery costs climbed 9.7 per cent on a year-over-year foundation, Statistics Canada mentioned Tuesday.
For February, retail gross sales have been down in 4 of the 9 subsectors as gross sales at gasoline stations and gas distributors fell 5.0 per cent for the month and normal merchandise retailers misplaced 1.6 per cent.
Meanwhile, gross sales at motorcar and elements sellers rose 0.9 per cent in February.
Core retail gross sales – which exclude gasoline stations and gas distributors and motorcar and elements sellers – elevated 0.1 per cent helped by a 4.4 per cent acquire in gross sales at clothes, clothes equipment, sneakers, jewellery, baggage and leather-based items retailers.
“Consumers are picking are choosing where they cut spending,” Winder mentioned. “More companies are quietly nudging workers back into the office, so that could be helping spending in some areas.”
In quantity phrases, a measure that adjusts for the influence of inflation, general retail gross sales fell 0.7 per cent in February.
© 2023 The Canadian Press
