Faced with sky-high inflation, consumers dropped their wallets more often in July, new data revealed Friday, as retail sales fell for the first time since 2021.
Canadian retailers posted $61.3 billion in sales in July, Statistics Canada reported Friday. That was a 2.5% drop from the previous month’s level as lower sales at gas stations and clothing stores led to the decline.
Sales at gas stations fell 14%. A large part of that is due to lower fuel prices, but even in volume, sales are down 7%. Fewer people are filling up gas this month, which is in line with the general vehicle segment as auto sales fell 0.5%. Both new and used car dealerships reported declines.
Consumer goods such as food and beverages also did not fly off store shelves, as supermarkets and grocers saw sales drop 0.9%, while liquor stores fell 1. 2%.
“The clear trend is that consumers are reducing spending,” said Desjardins economist Royce Mendes. “The slowdown in consumption is entirely in line with what the Bank of Canada is trying to design to raise interest rates.”
CIBC economist Karyne Charbonneau also linked the spending cut to recent central bank moves, saying in a note to clients that “Canadians may have begun to react to higher interest rates. .”