B.C. retail sales nosedive in March

Total retail sales in B.C. declined 4.6% from February to $7.01 billion, marking the deepest monthly decline since December 2008 and the lowest level since January 2018.

Sales fell 3.2% from a year ago. Businesses partially or fully scaled back their physical footprints due to COVID-19 and the negative demand shock from consumers staying at home.

That said, B.C.’s numbers positively glowed compared to other provinces as national sales plunged 10%. Other provinces closed non-essential businesses including most retail segments, while B.C. allowed many retailers to remain partially operational. Retailers pivoted quickly to online shopping and curbside pickup.

Retailers experiencing the sharpest year-over-year declines included the motor vehicle and parts sector (-28.6%) and clothing (-57.4%). A stay-at-home mentality and work environment – and less need for the latest fashions and greater reliance on sweatpants – factored into these patterns.

Grocers and supermarkets saw a huge gain of 24.4% year-over-year and health stores saw a 5.5% sales increase. Electronics and appliance stores posted an 18.3% gain as employees worked to improve their home spaces.

Retail spending is expected to have fallen further in April as households stayed home and businesses operated below capacity for the entirety of the month. With B.C.’s Phase 2 underway, more retailers have opened physical location to customers in mid-May (but with distancing policies) which should gradually drive sales higher. Levels are expected to remain significantly below pre-pandemic trends through 2020.

Headline consumer price inflation turned negative in April, driven by a plunge in gasoline prices and broader COVID-19-induced slowdown in the economy. Nationally, year-over-year growth in the consumer price index (CPI) fell from 0.9% in March to -0.2% in April, marking the first negative reading since September 2009. On a seasonally adjusted basis, CPI fell 0.7% from March. Gasoline prices saw a 39% drop from a year ago.

More broadly, inflationary pressures eased outside energy, which is not surprising given the recessionary impact of COVID-19 as purchasing has plummeted, leading to lower prices for clothing and other goods. Exceptions were high-demand goods such as store-bought foods and cleaning agents, which is understandable. Excluding both food and energy, inflation fell to 1.3% from 1.7% in March.

B.C. posted similar disinflation during the month, with the CPI essentially unchanged from a year ago, and down from a 1.2% reading in March as gasoline prices plunged.  •

Bryan Yu is deputy chief economist at Central 1 Credit Union.