Canadian Retailers Bounce Back After Most Covid Curbs Lift

(Bloomberg) -- Canadian retailers posted a strong sales comeback in March after authorities lifted the bulk of Covid restrictions.

Receipts rose 1.4% last month, according to preliminary estimates released by Statistics Canada on Friday. That’s up from a 0.1% increase in February, the agency said.

The numbers add to evidence that Canada’s economy was surprisingly resilient at the start of 2022 in the face of Covid-19 restrictions meant to contain the spread of the omicron variant. That’s one of the reasons the Bank of Canada has begun one of its most aggressive tightening cycles ever to curb three-decade high inflation. 

Even the small February gain was stronger than economists were expecting. Analysts surveyed by Bloomberg News predicted a 0.5% decline on the month.

Yet, accelerating inflation adds a potential headwind to consumer spending as households pull back on some purchases. Statistics Canada didn’t say how much of the March retail sales was driven by higher prices. Sales volumes actually fell in February. 

“The impact of surging inflation on household disposable incomes will likely be a stronger headwind to sales volumes in the retail sector in Q2 and beyond,” Andrew Grantham, an economist at Canadian Imperial Bank of Commerce, said in a report to investors.

The Canadian dollar pared losses from earlier in the day after the report, trading 0.6% lower at C$1.266 per U.S. dollar at 8:39 a.m. in Toronto.

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