Canadian consumers are pulling back on spending as rising prices and high interest rates appear to be taking a toll on retail sales.

Retail sales slipped 0.2 per cent to $66.3 billion in February amid a drop in spending at general merchandise stores and gasoline stations and fuel vendors, Statistics Canada said Friday.

The early estimate for March also points to an even steeper decline of 1.4 per cent, though the agency cautioned the figure would be revised.

91裸聊视频淲e91裸聊视频檙e starting to see consumers tighten their belts,91裸聊视频� retail analyst Bruce Winder said. 91裸聊视频淐anadian consumers are incredibly cautious right now.91裸聊视频�

Economists have warned of a lag between rising prices and high interest rates and the affect on the economy. While the Bank of Canada held its key lending rate at 4.50 per cent at its most recent rate decision, it is up from 0.25 per cent at the start of 2022.

91裸聊视频淚t is clear that consumer spending behaviour has been impacted by the rapid rise in interest rates even as the economy as a whole has generally outperformed expectations,91裸聊视频� Andrew Grantham, senior economist with CIBC Capital Markets, said in a client note.

Still, the pull back in consumer spending could help ease inflation even further, he said.

91裸聊视频淭his sluggishness in spending should help keep goods price inflation under control (assuming supply chain issues don91裸聊视频檛 worsen again), allowing the Bank of Canada to stay on hold for the remainder of this year before gradual cuts start early in 2024,91裸聊视频� Grantham said.

The annual rate of inflation in Canada dropped to 4.3 per cent in March, but grocery prices climbed 9.7 per cent on a year-over-year basis, Statistics Canada said Tuesday.

For February, retail sales were down in four of the nine subsectors as sales at gasoline stations and fuel vendors fell 5.0 per cent for the month and general merchandise retailers lost 1.6 per cent.

Meanwhile, sales at motor vehicle and parts dealers rose 0.9 per cent in February.

Core retail sales 91裸聊视频� which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers 91裸聊视频� increased 0.1 per cent helped by a 4.4 per cent gain in sales at clothing, clothing accessories, shoes, jewelry, luggage and leather goods retailers.

91裸聊视频淐onsumers are picking are choosing where they cut spending,91裸聊视频� Winder said. 91裸聊视频淢ore companies are quietly nudging workers back into the office, so that could be helping spending in some areas.91裸聊视频�

In volume terms, a measure that adjusts for the impact of inflation, overall retail sales fell 0.7 per cent in February.

The Bank of Canada91裸聊视频檚 business outlook and consumer expectations surveys released earlier this month found that the economy has been relatively resilient amid high interest rates but that91裸聊视频檚 expected to change in the coming months.

With a potential recession looming, the surveys showed consumers expect to pull back on spending and businesses anticipate sales will slow.

The Bank of Canada found almost half of firms have adjusted their business plans to account for a recession while consumers are planning to spend less on activities such as travel and going to restaurants over the next year.

91裸聊视频擝rett Bundale, The Canadian Press

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