Canadian retail sales edged up in October, but higher prices—not volume gains—drove the increase.
The results fell short of expectations and came on the heels of a sharp decline in retail sales in September, suggesting debt-laden consumers are doing little to boost an economy that continues to be buffeted by sharply lower commodity prices.
The value of Canadian retail sales increased 0.1% to a seasonally adjusted 43.42 billion Canadian dollars ($31.15 billion), Statistics Canada said Wednesday. Economists were expecting a 0.4% gain in October, according to Royal Bank of Canada. Retail sales volumes declined 0.3%.
Excluding motor-vehicle and parts sales, retail sales were flat at C$32.39 billion. Economists had expected sales excluding motor-vehicle and parts to rise 0.4%.
“The underlying trend has been softer growth relative to historic patterns,” Desjardins Capital Markets economist Jimmy Jean said in a note. “This is expected to continue as credit-driven consumption growth is likely to be a thing of the past in light of record high consumer debt levels.”
Also Wednesday, Statistics Canada said Canada’s economy flatlined in October, with gross domestic product unchanged from September.
Mr. Jean said the retail sales report, along with Wednesday’s GDP report, provide more evidence that the economy as a whole continues to struggle with lower commodity prices.
At a regional level, sales were down in seven of Canada’s 13 provinces and territories. In the province of Alberta, where the country’s oil resources are concentrated, retail sales fell 0.8% in October, the third straight monthly decline.
The slight gain in overall October retail sales was led by higher sales of clothing and footwear, which contributed to a 1.9% expansion in sales by clothing and clothing accessories stores. Sales at motor vehicle and parts dealers rose 0.4% in October, the eighth increase in nine months, Statistics Canada said.
Following two months of gains, sales at food and beverage stores decreased 1.2% in October, with lower sales at grocery stores and beer, wine and liquor stores contributing in equal measure to the decline.
