Good news for the retail sector today.
Statistics Canada is reporting that retail sales increased 0.7 per cent to $61.8 billion in August.
The federal agency said sales increased in six of 11 subsectors, with these six subsectors representing 65 per cent of retail trade. The increase was led by sales in food and beverage stores (2.4 per cent) and motor vehicle and parts dealers (0.6 per cent).
Core retail sales—which exclude gasoline stations and motor vehicle and parts dealers—increased 0.9 per cent, it said, adding it was the largest increase since March 2022.
“Leading the increase were higher sales at food and beverage stores (2.4 per cent). Increases in sales were observed in all four store types in the subsector, led by higher sales at supermarkets and other grocery (except convenience) stores (2.6 per cent). The Consumer Price Index noted that prices of food purchased from stores rose 10.8 per cent on a year-over-year basis, the largest increase observed since August 1981. Prices continued to be impacted by extreme weather, higher input costs, Russia’s invasion of Ukraine, and supply chain disruptions.” said StatsCan.
“Also contributing to the gain in core retail sales were higher sales at sporting goods, hobby, book and music stores (five per cent). Data from the Retail Commodity Survey have noted sustained strength in sporting equipment, in part due to many team sporting leagues resuming full capacity activities over the summer.
On a seasonally adjusted basis, retail e-commerce sales were up 5.7 per cent in August. On an unadjusted basis, retail e-commerce sales were up 8.1 per cent year over year to $3.5 billion in August, accounting for 5.2 per cent of total retail trade. The share of e-commerce sales out of total retail sales was unchanged compared with August 2021, said the federal agency.
Ksenia Bushmeneva, Economist with TD Economics, following a large drop in July, retail sales improved in August. Lower gasoline prices put consumers in better spirits and back behind the wheels to savor those final days of summer. In volume terms gasoline sales rose for the first time since April.
“While encouraging, today’s increase only partially reverses the steep drop in retail sales in July, and the preliminary forecast calls for sales to weaken in September. This suggests that the overall trend in spending remains one of deceleration,” said Bushmeneva.
“Indeed, household finances have taken a hit from the triple whammy of high inflation, rapidly rising interest rates and shrinking wealth. Thus it’s no surprise that consumers are becoming more cautious, and have been scaling back on discretionary items, such as dining out and entertainment, with monthly gains in sales at bars and restaurants fizzing out over the summer months. Our high-frequency data on TD debit and credit card spending reaffirms that this weakening trend remained in place in August and September. All in all, consumers will have to make some tough choices in the months ahead, all of which point to significantly weaker consumer spending in 2023.”
(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
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