Canada Retail Sales Jumps

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Canada Retail Sales Jumps

Canadian Retail Sales Jumps 0.4%

Canadian Retail Sales for the month of September has jumped by 0.4%. According to experts, this is a sign that consumer spending has made a rebound amid a reduction in the interest rate.

Consumers increased their spending at supermarkets and grocery stores, according to the data. This also led t the first increase on a quarterly basis for the year 2024.

0.25% Rate Cut Expected In December

On a m/m basis, the growth in retail sales during September was similar to August. However, the next month's reading will show a 0.7% jump, according to Statistics Canada. And if we look at the retail sales during the 3rd quarter, it showed a jump of 0.9%.

The Retail Sales data shows a healthy increase, which is a sign that the Q4 will start on a good note. Also, it will propel the economic growth in Canada. This is exactly what the BoC wanted to achieve with the recent rate cuts.

During the first two quarters of 2024, the retail sales data showed a decline as consumer spending took a hit due to higher rates.

Now, consumer spending seems to be rising once again amid a decline in inflation and interest rates.

Since June 2024, the Bank of Canada has reduced the interest rate by 1.25% (125 bps). As a result, the latest interest rate in Canada is now 3.75%, which has also helped consumer spending.

For next month's meeting of BoC, there's only a 14% chance of a 50 bps rate cut. However, the odds of a 0.25% rate cut in December is standing at 86%.

Canadian retail sales include purchases in different sectors such as vehicles, furniture, clothing, food, and so on. The overall economic condition in Canada has improved as evident from the recent retail sales data.

Looking ahead, consumer spending will likely improve as the BoC is planning another rate cut in December 2024.

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