By Ketki Saxena
Investing.com -- Canadian retail sales fell more than expected in July, for the first decline in seven months, Statistics Canada announced today.
Retail sales fell 2.5% in July to a seasonally adjusted $61.3 billion, while market expectations were for a 2% monthly decline. On a price-adjusted, or volume basis, retail sales were down 2% in July.
The declines were broad-based, and seen across nine of 11 subsectors, representing 94.5% of retail trade. The losses were led by lower sales at gasoline stations, and clothing and clothing accessories stores.
Marc Desormeaux, Principal Economist at Desjardins Securities believes that the “July retail sales print is the strongest signal yet that Canadian households are pulling back on spending amid decades-high inflation and sharply higher borrowing costs.”
This is a view reinforced by RBC (TSX:RY) Economist Claire Fan who notes today’s data indicates that “Though the full impact of surging inflation and interest rates have yet to be felt, economic data has already been losing momentum”.
Benjamin Reitzes, Managing Director, Canadian Rates & Macro Strategist at BMO (TSX:BMO) Capital Markets also notes that today’s data makes it “Clear that inflation is eroding purchasing power”.
Karyne Charbonneau, executive director of economics at CIBC (TSX:CM) Capital Markets takes a more understated tone, stating that the data shows "Canadians may have started to react to higher interest rates." Charbonneau further predicts that “With a rotation of demand away from goods and towards services, we would expect retail sales to slow in coming months.”
Statistics Canada said early indicators from companies suggest that retail sales increased 0.4% in August.