"Even though gasoline prices were bit higher on the month, year-over-year basis will still be lower. So that should not provide much of a support."
- CIBC World Markets
Retail sales in Canada, the 11th biggest economy in the world, dropped considerably for a second consecutive month in January due to falling prices of oil. After an upwardly revised plunge of 2% back in December 2014, sales in the beginning of the year continued to under-perform as they lost 1.8% more, when excluding automobiles. This is more than four times worse than the average market expectation of a 0.4% decrease. Taking into account the indicator which includes car sales, a slump amounted to 1.7% on a monthly basis. Now, with the total volume of retail trade just above $41 billion, it is now under the risk of returning below $40 billion threshold, which was last time surpassed around two years ago. Meanwhile, not only gasoline prices provided retail sales with negative impetus. Considerably lower sales were registered for alcoholic drinks (-4.1%) and at specialty food stores (-6.7%).
At the same time, Canadian inflation used to be released better than initially forecasted. On a monthly basis, core CPI gained 0.6% in February. The headline inflation, which includes energy prices, stayed at 0.9%, up from -0.2% in January. The annual inflation, in turn, was unchanged at 1%. Economists predict that prices in Canada will be supported by weaker Loonie, which is suffering from strengthening US Dollar across the board.
© Dukascopy Bank SA