Retail sales in Canada fell by 0.8% to $69.6 billion in July, as consumers spent less at supermarkets and grocery stores, according to Statistics Canada. The decline came despite a modest 0.2% increase in sales at motor vehicle and parts dealers — the only retail subsector to see growth that month.
Eight out of nine tracked subsectors recorded lower sales, with food and beverage retailers posting a 1.3% drop. Supermarkets and other grocery retailers saw an even steeper decline of 2.5%. Clothing and accessories retailers also struggled, with sales down 2.9%.
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Core retail sales — which exclude gasoline, fuel vendors, and motor vehicles — dropped 1.2%, while overall retail sales volume also decreased by 0.8%.
Despite the downturn in July, an early estimate from Statistics Canada suggests retail sales may have rebounded by 1% in August, though this figure is subject to revision.
TD Bank economist Maria Solovieva noted that data volatility remains high and warned that economic pressures are likely to impact consumer behaviour going forward.
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“Cooling employment and softer wage gains are likely to catch up with consumers in Q3, reinforcing a more frugal mindset,” she said. While high-income households may continue to support services spending, Solovieva predicts goods demand will contract significantly, particularly in vehicle sales.
These retail trends come in contrast to recent increases in manufacturing and wholesale sales reported earlier in the week. Still, concerns about broader economic weakness persist. The Bank of Canada recently cut its benchmark interest rate by 0.25 percentage points to 2.5%, citing economic headwinds.
Canada’s labour market also showed signs of strain, with 66,000 jobs lost in August, following a decline of 41,000 jobs in July.
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