- Andrew Grantham, Canadian Imperial Bank of Commerce economist
Canada's retail sales unexpectedly dropped in October, driven by a decline in sales of gasoline and autos, raising further fears over the Canadian economy in the second half of the year. Retail sales decreased the most since January, falling 0.5% to C$43.3 billion, Statistics Canada reported, whereas volumes climbed 0.1%. Meanwhile, core retail trade, which excludes automobile and parts sales, also slipped 0.5% after remaining flat in September. Sales at gas stations plunged 3.7% and hit the lowest level in eight months, mainly as a reflection of lower gasoline prices. A separate report showed the Bank of Canada's annual core CPI, which excludes eight volatile components, ran at the same pace as in the preceding month, posting 2.1%, which kept the index above the BoC's 2% target for the fifteenth month in a row.
Analysts have been predicting a strong economic recovery in the second half of the year, following contractions during the first five months of 2015. In October the BoC revised its third quarter growth projections from 1.5% to 2.5%. Economists still believe that Canada's GDP growth could stay on track for 2.5% growth, but warn that the economy could end the quarter on a much softer note. The latest Canadian GDP figure for August showed a 0.1% rise.
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