👀 Copy Legendary Investors' Portfolios in One ClickCopy For Free

Bank of Canada's rate hikes impact consumer spending, retail sales dip

EditorHari Govind
Published 09/22/2023, 10:32 PM
© Reuters.
CAD/USD
-

The Bank of Canada's increased interest rates appear to be tightening household budgets, leading to a decline in consumer spending. Preliminary data from Statistics Canada showed a 0.3% decrease in retail receipts for August, marking the first drop since March. This downturn follows a less-than-expected 0.3% rise in July, falling short of the anticipated 0.4% increase.

In July, seven out of nine subsectors reported sales growth, with food and beverage retailers recording substantial increases. Conversely, motor vehicle and parts dealers experienced the sharpest decline that month, their first in four months. If this sector is excluded, retail sales saw a 1% increase in July, doubling expectations.

However, retail sales measured by volume dipped by 0.2% in July, suggesting that Canadian households may be tightening their budgets due to factors such as mortgage payment renewals and high fuel costs. On September 6, the Bank of Canada maintained its borrowing costs, citing evidence that higher rates are effectively slowing economic and consumption growth.

After a five-month pause, the central bank resumed hiking interest rates in June and July following observed strength in household spending earlier this year. The next rate decision is expected on October 25, with most economists predicting the bank will maintain its current stance.

On a regional level, five provinces reported increased sales in July, led by Quebec and British Columbia. Ontario, however, recorded the largest provincial decrease due to lower sales at motor vehicle and parts dealerships.

Statistics Canada noted that approximately 17% of Canadian retailers were affected by the strike at British Columbia ports in July. The most substantial estimated impact on unadjusted sales in dollar terms was seen at motor vehicle and parts dealerships. The agency did not provide further details on their August estimate which was based on responses from slightly less than half of the surveyed companies.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.