- CIBC World Markets
Retail sales in Canada, the 11th largest economy in the world based on nominal GDP, surged at the highest pace since June 2014 in November. Gains were mostly driven by hot pre-holiday season, as retailers managed to use this time to boost revenue. Sales skyrocketed by 1.7% during the reported month, while economists had anticipated a rise of just 0.2%. Physical volumes surged by 1.5%, signalling that exactly more goods were sold by Canadian retailers and supermarkets. It seems that the Canadian economy will benefit from such a positive retail sales report in November, as domestic consumption accounts for 56% of the whole national output. GDP data will be available at the end of next week.
As for inflation, consumer prices accelerated on an annual basis in December, even though there was a setback in terms of month-to-month change. Yearly CPI gained 1.6% over the past year, booking a gain from 1.4% in the preceding month. In the meantime, a less volatile consumer price growth reading released by the Bank of Canada slid to 1.9% in December, down from November's reading and also the BoC's target of 2%. The core CPI excludes such items as energy and seven other groups of products and services. Thus, it seems that inflation is not the major issue for the Bank of Canada, which is much more worried about slowing economy in the wake of tumbling oil prices.
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