B.C. retailers saw modest positive momentum heading into 2020 with retail spending at bricks-and-mortar stores up 0.1% in December to $7.26 billion. This followed a 1.4% increase in November.
Year-over-year, sales were up a mild 1.5% in December, up from a 0.8% increase in November.
While headline growth in December was nothing to write home about, there were a few highlights. Electronics and appliance sales rose 7.8% on a year-over-year basis following prior-month declines, while clothing sales (up 0.6%) and sporting goods/recreation products (up 5.8%) also posted year-over-year improvements.
The main drags on growth were motor vehicle sales (down 4.3% year-over-year) and sales at gas stations (down 4.5%). That said, the latter generally reflect changes in gas prices, and declines mean savings for households. Excluding vehicle sales and gasoline, sales were up 4.7% year-over-year.
A modest fourth-quarter rebound of 0.6% wasn’t enough to stave off a poor year for retailers.
Full-year sales rose 0.6% to $86.5 billion, compared with a national increase of 1.6%. B.C. sales rose 2% in 2018. Declines in vehicle sales and building materials likely reflect a combination of household belt-tightening amid high debt loads, lower home sales for much of the year and lower vehicle replacement demand. Online sales are also taking up an increasing share of household spending.
A firm labour market and rising population are expected to support retail spending in 2020, but coronavirus fears could curtail spending owing to lower global tourism flows and associated spending.
Alongside most other provinces, B.C. consumer price inflation accelerated in January. Year-over-year growth in the consumer price index increased to 2.3% from 2.1% in December. The main driver was a sharp increase in energy costs. Specifically, gasoline prices rose 8.1% year-over-year.
Meanwhile, households were further pinched by rising food prices, which climbed 4.3% from a year prior, owing in large part to higher meat and vegetable prices. Renters are seeing significant hikes for accommodations, with rent up 3.9%. Clothing prices have also ramped up with growth of 5.5%, and public transit costs are up 6.2%. It would seem the cost of necessities is significantly affecting younger and lower-income households.
In contrast, headline price growth was dampened by a scant increase in homeowner costs of 0.3%, due in part to lower replacement and mortgage interest costs.
Costs have also declined for telephone services (-10.8%) and internet (-1%). •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
