By Robb M. Stewart
OTTAWA--Retail sales in Canada faltered in November, in part as consumers pulled back on grocery purchases with a rise in food prices, though early indications suggest a recovery in overall sales for the holiday season.
Households in Canada have been squeezed by the impact of a jump in interest rates and high inflation, and sales on a volume basis slipped again in November.
Retail sales slipped 0.1% from the previous month to a seasonally adjusted 61.79 billion Canadian dollars, the equivalent of about $45.88 billion, Statistics Canada said Friday. That was less than Statistics Canada's preliminary estimate last month for a decline of 0.5% on-month, after retail sales climbed a downwardly revised 1.3% in October.
The statistics agency said that early indications from companies suggest that retail sales rose 0.5% in December, though the figure is an estimate and will be revised.
Core retail sales, which exclude gasoline stations and motor-vehicle and parts dealers, dropped 1.1% from October, the biggest monthly decline in 11 months, Statistics Canada said. Core sales have now fallen in four of the last six months.
On a price-adjusted, or volume basis, retail sales were down 0.4%, and have only risen in two of the last six months.
On the other side of the border, Americans cut back on retail spending for the holiday season, with retail sales in the U.S. declining a seasonally adjusted 1.1% on-month in December after a 1% decline in November.
Canada's economy is widely expected to cool through the early months of this year after the Bank of Canada, like the Federal Reserve, ramped up interest rates to tackle inflation. The central bank, which is set to make its latest monetary policy call next week after boosting its benchmark rate four percentage points in 2022 to its highest level in almost 15 years, in October forecast growth would stall through the middle of this year.
Canadians have reduced purchases on a broad range of goods and services over the past six months because of high inflation and rising interest rates, a Bank of Canada survey of consumer expectations for the fourth quarter of 2022 found. The survey cited rising costs for food and other necessities as a key concern for consumers, a growing number of who plan to continue reducing spending or postponing purchases.
Statistics Canada said November's drop in core retail sales was led by lower sales at food and drink stores, particularly supermarkets and other grocery outlets, as food prices continued to rise.
Also adding to November's weakness, retail sales were lower at building material and garden equipment and supplies dealers, which as a segment recorded its largest decrease in seven months and coincided with deteriorating housing market conditions, the agency said.
Sales at motor vehicle and parts dealers rose 1.4% for the month, with broad gains led by sales at new car dealers, which saw the fastest pace of growth since June.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
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