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Retail Sales Fall and Inflation Moderates

Jun 22, 2018

The Conference Board of Canada’s Principal Economist Alicia Macdonald offers the following insights on the Retail Sales and Consumer Price Index data released today:


Consumer spending in the second quarter points to continued softness in household spending with retail sales falling in April. Other data released this morning showed two of three core inflation measures were unchanged in May, while the third showed a deceleration in growth. This information strengthens the possibility that the Bank of Canada will leave rates unchanged when it meets next month.
—Alicia Macdonald, Principal Economist, The Conference Board of Canada.


  • Retail sales fell for the first time in four months in April, down 1.2 per cent led by declines in motor vehicle and parts purchases.
  • Excluding motor vehicles and parts and gasoline, sales were down 0.3 per cent on the month and were up by a soft 1.2 per cent.
  • After stripping out the affect of price changes, retail sales fell 1.4 per cent on the month and were down 0.7 per cent on the year.
  • The latest reading on inflation was also released this morning with total prices growing at 2.2 per cent—the same pace as in April.
  • While growth in headline inflation held steady, there were downward revisions over the past few months in the Bank’s core inflation measures. Two measures are showing core inflation steady over the past few months at 1.9 per cent while the trim measure decelerated from a 2.1 per cent pace in April to 1.9 per cent in May.
  • There was also a notable deceleration in price growth after stripping away the impact of gasoline prices. Inflation, excluding gasoline prices, grew just 1.5 per cent in May compared to a 1.7 per cent pace in April. 
  • When the Bank of Canada meets in July, it will have to weigh the impact of slowing consumer spending and uncertainties on the trade front against the fact that our economy is operating close to capacity and inflation is almost at target. Our forecast assumes that the Bank will raise rates in July but these latest data readings raise the possibility that they will remain on hold.

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