Retail sales rise to $70.4 billion on alcohol and food, but inflation and consumer strain flash warning signs
Beer, wine, and grocery receipts are doing the heavy lifting in Canada’s latest retail numbers, raising questions about whether higher prices rather than stronger demand are driving the headline.
Statistics Canada revealed retail sales rose 1.3 percent to $70.4bn in November, with volumes up 1.1 percent.
Core retail sales — excluding gasoline stations and fuel vendors and motor vehicle and parts dealers — increased 1.6 percent after two monthly declines, led by a 3.0 percent gain at food and beverage retailers.
Statistics Canada said beer, wine and liquor retailers jumped 14.3 percent after an 11.8 percent drop in October tied to labour disruptions in British Columbia that had affected alcohol distribution, while supermarkets and other grocery retailers rose 1.2 percent.
BNN Bloomberg reports that the 1.3 percent headline gain coincided with a deal to end the BC liquor distribution dispute, giving alcohol-related sales a one-off lift.
Retail sales rose that month, but the gain was deceptive, said Norman Levine, portfolio manager at Brook Wagman Private Wealth Management at Raymond James in an interview with BNN Bloomberg.
He noted that beer, wine, spirits and food drove the increase, with “booze prices going up,” and questioned whether consumers were truly spending more.
Levine linked the data to persistent price pressures rather than healthier consumers.
He noted that Canada has “the highest food inflation in the G7 by a lot” and said that with food prices “up over seven per cent year over year” and sales “basically flat when you take out booze sales,” the economy is not growing for consumers even as the prices they pay keep rising.
He warned this shows “the possibility of stagflation” and “doesn’t portend well for the average Canadian consumer, who is hurting.”
He also described “a K-shaped economy where the well-to-do — and the boomers, I’m one — are doing well, whereas younger people are struggling to get jobs, struggling to pay for rent, homes and food,” contrasting this with a US economy he said is “doing better and projected to do better.”
Beyond food and alcohol, Statistics Canada reported that health and personal care retailers saw sales rise 1.6 percent, while clothing, clothing accessories, shoes, jewellery, luggage and leather goods retailers increased 2.4 percent, led by a 2.7 percent gain at clothing and clothing accessories retailers.
Building material and garden equipment and supplies dealers rose 2.1 percent.
Regionally, retail sales increased in seven provinces.
Alberta posted the largest dollar gain, up 3.7 percent on higher motor vehicle and parts sales, while Ontario rose 0.8 percent and Toronto 0.9 percent, according to Statistics Canada.
New Brunswick saw a 0.7 percent decline, led by weaker food and beverage retailers.
Statistics Canada said seasonally adjusted retail e-commerce sales fell 2.8 percent to $4.0bn in November, accounting for 5.7 percent of total retail trade, down from 6.0 percent in October.
An advance indicator from Statistics Canada suggests retail sales decreased 0.5 percent in December, based on responses from 61.3 percent of surveyed companies, with the agency cautioning that it will revise this estimate.
