Up to date retail sales numbers from Statistics Canada on Wednesday show that despite high prices and dire warnings about debt loads, Canadians remain in the mood to shop.
The data agency reported Wednesday that retailers took in $65.9 billion in April. That’s an increase of 1.1 per cent from March’s level.
Just about every type of store booked higher sales during the month, with the exception of furniture, electronics and appliances retailers, where sales shrank by 1.6 per cent from March’s level.
So-called core retail sales, which strip out volatile items like gas, cars and car parts, actually increased by even more: 1.5 per cent.
That metric has now increased for five months in a row, even as calls for consumers to tighten their belts have grown. Sales increased in eight of 10 provinces, led by New Brunswick where they were up by 4.4 per cent. The two exceptions were Prince Edward Island and Newfoundland and Labrador.
In a mood to spend
A large part of the spending spree can be chalked up to inflation, as higher prices mean people pay more for the same amount of products and services — which will boost a retailer’s take.
But sales also increased in terms of volume, too, rising by 0.3 per cent during the month.
The sales surge was more than twice as strong as what economists were expecting, and early numbers for May from the data agency show that month is on track for another gain, of 0.5 per cent. That puts it on track to beat the all-time monthly high of $66.3 billion clocked in June of 2022.
Shelley Kaushik, an economist with BMO, says the numbers show that consumer spending is proving to be “resilient” in the face of growing pressure. “Looking ahead, the momentum in consumer spending is expected to slow in the second half of the year, as yet higher interest rates and still-elevated inflation continue to weigh on purchasing power.”
Royce Mendes, an economist with Desjardins, says the numbers only increase the likelihood that policy makers at the Bank of Canada will have to do more to get a lid on inflation.
“Coming off a strong first quarter of consumer spending, a second consecutive monthly moving higher is not what the Bank of Canada will be looking for as it hopes to slow domestic demand,” he said. “As such, today’s retail print just works to reinforce our call that another 25 basis point hike in July is likely.”