Retail sales increased 0.5 per cent to $62.1 billion in December. Sales increased in seven of 11 subsectors, representing 75.1 per cent of retail trade. Higher sales at motor vehicle and parts dealers (+3.8 per cent) and general merchandise stores (+1.7 per cent) led the increase, reported Statistics Canada on Tuesday.
The federal agency said core retail sales—which exclude gasoline stations and motor vehicle and parts dealers—increased 0.4 per cent and in volume terms, retail sales increased 1.3 per cent in December.
StatsCan also reported that retail sales increased 8.2 per cent in 2022, led by gasoline stations and general merchandise stores. In volume terms, sales were up 1.5 per cent in 2022.
“Following the decline in November, core retail sales were up 0.4 per cent in December. Higher sales at general merchandise stores (+1.7 per cent) led the increase in core retail. This marked the third increase in the last four months, as many consumers were seeking additional retail options to grocery stores for food and beverage purchases,” it said.
“Higher sales at food and beverage stores (+0.5 per cent) also contributed to the increase in core retail sales. Sales were up at supermarkets and other grocery (except Convenience) stores (+0.6 per cent) and beer, wine and liquor stores (+1.3 per cent). On a year-over-year basis, prices for food purchased from stores were up 11.0 per cent.
“Building material and garden equipment and supplies dealers (-3.8 per cent) posted the largest decline to core retail sales. Sales declined for four consecutive months amidst higher interest rates and deteriorating housing market conditions.”
On a seasonally adjusted basis, retail e-commerce sales were down 5.7 per cent in December. On an unadjusted basis, retail e-commerce sales were down 2.4 per cent year over year to $4.4 billion in December, accounting for 6.5 per cent of total retail trade. The share of e-commerce sales out of total retail sales fell 0.6 percentage points compared with December 2021, added Statistics Canada.
Ksenia Bushmeneva, Economist, TD Economics, said retailers had a pretty busy December with consumers keeping their purse strings open during the holidays.
“Some of the resilience in the headline was due to strong auto sales, as improved auto production helped to clear the backlog of orders. Consumer also got some reprieve from financial headwinds at the end of the year, marked by a sizeable drop in gasoline prices. The labour market also churned out large job gains in both December and January. Additionally, many households received provincial government checks at the end of the year, meant to ease the strain of rising prices, or benefited from reduced daycare fees as part of the federal government childcare initiative. Today’s inflation report showed that daycare prices were down 30 per cent from the year ago,” said Bushmeneva.
“All in all, similar to the labour market, consumer spending momentum appears to have picked up toward the end of last year and into the start of 2023, despite high interest rates and still elevated inflation. Statistics Canada preliminary data point to another gain in January, which is corroborated by our internal debit and credit card aggregate spending data. If upside data surprises and resilience in consumer spending and employment continue, they could eventually force the Bank of Canada to end its pause and return to the inflation battle.”
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