Retail sales ‘momentum is clearly slowing’ amid interest rate hikes

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Statistics Canada says retail sales rose 0.2 per cent to $66.0 billion in May, helped by gains at new car dealers and grocery stores.

However, the figure fell short of the agency’s early estimate for May released last month that forecasted a gain of 0.5 per cent.

Its early estimate for June suggests retail sales for that month were unchanged, but cautioned the figure would be revised.

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For May, sales at motor vehicle and parts dealers gained 0.8 per cent, helped higher by a 0.7 per cent sales gain at new car dealers and a 5.5 per cent increase at other motor vehicle dealers.

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Sales at food and beverage retailers rose 1.0 per cent as sales at supermarkets and grocery stores gained 1.4 per cent.

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Core retail sales – which exclude gas stations and fuel vendors, along with motor vehicle and parts dealers – were unchanged in May.

“Retail sales momentum is clearly slowing,” Marc Desormeaux, principal economist at Desjardins wrote in a note Friday. “Purchases came in below consensus estimates, and we’ve now seen weak growth or outright declines in three of the past four months, with signs of more softness in June.

“Another 25 bp [basis point] interest rate hike earlier this month from the Bank of Canada should weigh on the consumer in July and beyond.”

In volume terms, retail sales rose 0.1 per cent for the month.

With files from Global News’ Nicole Gibillini

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