Higher gas prices and sales at new car dealers helped lift Canadian retail sales 2.2% in May to $62.2 billion, but an early estimate by Statistics Canada pointed to a slowdown in the pace of sales gains for June.
The reading for May topped the agency’s preliminary estimate for the month that had suggested a gain of 1.6%, however Statistics Canada said Friday its early estimate for June pointed to growth of just 0.3%.
TD Bank economist Ksenia Bushmeneva said retail sales advanced at a strong pace in May, but the details of the report were not as positive.
“Much of the gain in May is due to higher prices, particularly at the pump, and a recovery in auto sales following three months of decline,” Bushmeneva wrote in a report.
Digging deeper in the report, she said a number of categories, such as gasoline, clothing and sporting goods, actually saw sales fall in inflation-adjusted terms.
Statistics Canada said core retail sales — which exclude gasoline stations and motor vehicle and parts dealers — increased 0.6% for May, while overall retail sales in volume terms rose 0.4% in the month.
“With inflation running at a multi-decade high, higher prices have been giving a lift to nominal retail sales figures. As such, it’s becoming increasingly important to look at spending in real or inflation-adjusted terms,” Bushmeneva said.
Statistics Canada said the overall increase in retail sales for May came as sales rose in eight of the 11 subsectors it tracks.
A 12.0% gain in gas prices helped lift sales at gasoline stations 9.2% in May, however in volume terms sales at gas stations fell 2.2%.
Meanwhile, sales at motor vehicle and parts dealers rose 3.3% boosted by a 3.8% gain at new car dealers, its best showing since February 2021. Sales at automotive parts, accessories and tire stores gained 5.8% and other motor vehicle dealers gained 1.1%, while used car dealers saw a drop of 1.6%.
The gain in core retail sales was led by a 1.9% gain in sales at food and beverage stores, while sales at general merchandise stores gained 1.4%.
Statistics Canada said the largest decline to core retail sales in May came from a 6.7% drop in miscellaneous store retailers which includes pet stores, cannabis stores and office supplies and stationery stores.