Consumers are pulling back from shopping as inflation and interest rate hikes continue | TBEN News

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Facing skyrocketing inflation, consumers were more likely to put their wallets away in July, new data showed on Friday, as retail sales fell for the first time since 2021.

Canadian retailers posted sales of $61.3 billion in July, Statistics Canada reported Friday. That’s down 2.5 percent from the previous month’s level, as lower sales at gas stations and clothing stores led the way down.

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Sales at gas stations fell by 14 percent. Much of that was lower prices for the fuel itself, but even in volume terms, sales fell by seven percent. Over the month, fewer people were full, which was in line with the vehicle segment in general as auto sales fell 0.5 percent. Both new and used car dealers reported declines.

Consumables such as food and beverages also didn’t fly off the shelves, as supermarkets and supermarkets saw sales drop 0.9 percent, while liquor stores saw a 1.2 percent drop.

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“The trend is clear, consumers are pulling back on spending,” said Desjardins economist Royce Mendes. “The slowdown in consumption is exactly in line with what the Bank of Canada is trying to achieve with its rate hikes.”

CIBC economist Karyne Charbonneau also linked the spending slowdown to recent moves by the central bank, saying in a note to customers that “Canadians may have begun to react to higher interest rates.”

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