Retail sales in Canada declined for a second consecutive month in February, falling short of expectations, according to data released on Wednesday. This decline was attributed to reduced sales at gas stations and fuel suppliers.
Statistics Canada reported a 0.1% drop in retail sales for February, following a 0.3% contraction in January. The agency indicated that a preliminary estimate suggested sales were likely to remain unchanged in March.
The consecutive decline in retail sales over two months highlights the ongoing economic challenges exacerbated by high interest rates. Analysts surveyed by Reuters had anticipated a 0.1% increase in retail sales for February.
While the Canadian economy managed to achieve positive GDP growth in January and is projected to maintain this trend in February, the growth has been sluggish as both consumers and businesses struggle with interest rates nearing a 23-year high.
The Bank of Canada opted to maintain its key overnight rate at 5% earlier this month for the sixth consecutive time while signaling the possibility of a rate cut in June. Market sentiment suggests that there is an even chance of a rate reduction in June, while a 25 basis point cut in July is fully anticipated.
Following the release of retail sales data, the Canadian dollar experienced a slight weakening. Canada's annual inflation rate climbed to 2.9% in March; however, core price pressures, closely monitored by the central bank, declined for the third consecutive month.
Since January, inflation has consistently stayed below 3%, remaining within the Bank of Canada's target range between 1% and 3%. The bank aims to maintain inflation at 2%, which sits at the midpoint of the range.
While car sales transactions, representing over a quarter of total sales (the largest segment), saw a 0.5% increase, the overall volume was dampened by widespread declines across several subsectors, as reported by the statistics agency.
Sales in the retail sectors of furniture, household goods, electronics, clothing and accessories, and building materials all experienced declines.
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