Ottawa Retail sales flatlined last month following a second consecutive month of declines, indicating that Canadians are still reluctant to spend, which reinforces expectations that the central bank will start reducing interest rates as early as June.
According to a preliminary estimate of retail receipts, sales in March remained constant, Statistics Canada announced on Wednesday. This comes after the data agency reported that sales in February decreased by 0.1% to a seasonally adjusted C$66.73 billion, or roughly $48.8 billion.
The 0.3% decline in January sales, another indication of the pressure that high loan rates are placing on Canadian household budgets, came after a 0.1% decline in January sales, which was less severe than the 0.1% advance estimate provided by Statistics Canada and analysts. The loss in February, which was mostly caused by a decline in sales at gas stations and fuel vendors, would have been more severe if sales at the car and parts dealers hadn’t bounced back after weakness in January when several production plants’ retooling interrupted vehicle production.
According to Katherine Judge, senior economist at CIBC Capital Markets, “Spending will remain under pressure with the unemployment rate rising and mortgages continuing to renew at higher interest rates.” Judge is one of the analysts who predicts the Bank of Canada will start lowering its benchmark interest rate at its upcoming policy meeting in early June.
