Retail sales fell by 0.6% month-on-month in September. The decline was more pronounced after stripping away the effect of prices, with the volume of sales down 1.1%. Looking ahead, the Statistics Canada flash estimate calls for some improvement in October, with sales projected to increase by 1.0%.
Lower sales of cars weighed on the headline. Sales of motor vehicle & parts were down 1.6%, held back by the lingering semiconductor shortage. Sales of gasoline were little changed in nominal terms (+0.2%), and were down 0.7% in volume terms.
Core sales, which exclude autos and gasoline, edged lower by 0.3% in September. Core sales were held back by a pullback in clothing and accessories stores (-5.9%), which posted its first decline since May. September was also another disappointing month for electronics & appliance stores (-0.7%), with sales falling for the sixth consecutive month. Sales were slightly lower at building materials and garden equipment stores (-0.2%) as well as at health & personal care stores (-0.5%).
On the other hand, food & beverage stores had a good month, with sales up 1.3%, partially due to higher food prices. Furniture stores also fared better in September (+1.3%).
On a regional basis, sales were up in every province other than Ontario (-4.4%). The decrease in Ontario was driven by lower sales at motor vehicle and parts dealers.
Online sales rose 5.1% on the month. This left online sales up 1.8% from the year ago and 66% above their pre-pandemic level.
Key Implications
Retail sales fell in September. However, the decline appears to be driven overwhelmingly by Ontario, where a large drop in vehicle sales weighed heavily on the headline number. Excluding Ontario, retail sales were up 1.7% on the month.
Some of the categories that underperformed in September were the ones most impacted by global supply-chain challenges: autos and appliances. Sales at clothing and accessories stores also pulled back, but this likely reflects some moderation in activity following three consecutive months of very strong gains.
Shortages of various inputs due to supply chain issues have led to brisk price increases for consumer goods. In October, prices of goods were 6.5% higher than they were a year ago, rising at the fastest clip since the 1980s. While households finances remain in fairly good shape, higher prices and limited availability of some items may begin to chip away at how much consumers spend on goods, particularly as they direct a larger share of their budgets toward services.
