'Surprised if Bank of Canada continued to raise rates': What economists are saying about retail sales

For economists, the signs of waning “excess demand” — weak data in May and June and a downgrade for April — are unmistakable.

“There are clear signs that consumer spending is stalling,” Charles St-Arnaud, chief economist at Alberta Central, said in a note from July 21. “The moderation in consumption is even more evident when adjusting for inflation and population growth.” Here’s what economists are saying about the latest retail sales numbers and what they mean for the Bank of Canada and interest rates.“The latest preliminary estimate implies that retail sales values were unchanged in June which, given gasoline prices rebounded last month, implies that retail sales volumes fell again.

“The ‘greater persistence of excess demand’ remains a challenge for the Bank of Canada. The bank expects that household consumption will slow over the course of next year as additional hikes work their way through the economy. With today’s reading, there is evidence that this slowdown is materializing. Still, consumers have financial resources in the form of excess savings, so the path to moderation may not be a smooth one.

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