Canadian retail sales fell 1.4% to $65.3 billion in March as sales at gas stations and new car dealers declined, Statistics Canada said Friday.
However, the agency said its early estimate for April pointed to a gain of 0.2% for that month, though it cautioned the figure would be revised.
“While March’s decline in retail sales was no worse than anticipated, and was driven largely by volatility in auto and gasoline sales, slight cracks are starting to show within Canadian consumer spending,” CIBC senior economist Andrew Grantham wrote in a report.
“Although spending on services is likely to have held up better, a softening trend in retail sales volumes towards the end of Q1 is a sign that perhaps the Bank of Canada simply needs more patience, rather than more interest rate hikes, in its quest to bring inflation back down to target.”
The Bank of Canada kept its key interest rate target on hold at 4.5% last month, but the central bank’s governing council did consider raising it in their deliberations before deciding to stand pat.
Governor Tiff Macklem has said the bank is prepared to raise rates further if signs showed inflation is likely to get stuck above its two per cent target.
The annual inflation rate for April was 4.4%, up from 4.3% in March and the first increase since it peaked last June at 8.1%.
Statistics Canada said Friday retail sales rose in five of the nine subsectors it tracks as core retail sales — which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers — rose 0.3% in March.
Sales at motor vehicle and parts dealers dropped 4.4% in March, their first decline in eight months as sales at new car dealers fell 4.8%.
Sales at gasoline stations and fuel vendors were down 3.9%.
Meanwhile, sales at building material and garden equipment and supplies dealers rose 1.6% and sales at sporting goods, hobby, musical instrument, book, and miscellaneous retailers gained 1.6%.
In volume terms, Statistics Canada says retail sales fell 1.0% in March.