Forget Deflation. Stagflation Arrives in Canada
Worst Plunge in Retail Sales since 2008. Inflation Whacks Consumers
Retail sales in Canada fell 2.2% in December from November on a seasonally adjusted basis, but not adjusted for inflation, to C$43.2 billion. “Declines were widespread as lower sales were reported in 10 of 11 subsectors, representing 97% of retail trade,” Statistics Canada said.
It blamed the weather. I mean, really. “Later snowfalls and unseasonably warm weather in many parts of Canada may have contributed to lower seasonal purchases.” It said this right after saying that the decline was widespread, and therefore beyond winter jackets, thermal underwear, and fuzzy earmuffs.
Motor vehicle sales dropped 3.9%, with sales at new car dealers falling 4.1%. In dollar terms, given the magnitude of motor vehicle sales, it was the largest decrease among all subsectors. But wait… “Unseasonably warm weather” in the winter is great for car sales, so they should have jumped!
On the other hand, the sub-category of “other motor vehicles dealers” includes snowmobiles, and there sales plunged 6.7%, down for the third month in a row. In this subsector of motor vehicle sales, the weather likely did played a role. But then, sales also fell 2.5% at used car dealers though warmer weather should have really helped them.
Which leaves us stumped about the weather excuse.
Then the really bad news, StatCan put it: “Store types typically associated with holiday shopping registered weaker sales in December,” with sales at general merchandise stores down 2.2%, falling for the second consecutive month in a row; clothing and accessory stores down 3.6%; electronics and appliance stores down 3.0%, the fourth month of falling sales in six; sales at sporting goods, hobby, book and music stores down 2.3%.
And it was spread across the country. Retail sales dropped in nine of the 10 provinces and in all 3 territories. Only exception: tiny Prince Edward Island, where retails sales were flat.
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