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B.C.’s consumer spending stays strong

B.C. retail sales rose 1.1% to $8.3 billion after a 0.8% decline in July and marked a 9.6% year-over-year increase. Core retail sales (excluding motor vehicle and gasoline) firmed during the month but rose closer to 2.5% year over year.
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B.C. retail sales rose 1.1% to $8.3 billion after a 0.8% decline in July and marked a 9.6% year-over-year increase.

Core retail sales (excluding motor vehicle and gasoline) firmed during the month but rose closer to 2.5% year over year. Broadly, consumer spending patterns have remained robust, with sales up 12% from February 2020.

August sales growth was dampened in part by a decline at motor vehicle and parts dealer sales, but auto sales remained up more than 20% from a year ago, in part due to higher prices as component shortages weigh on new vehicle availability and drive up resale prices. Clothing sales growth firmed, but retail food and beverage sales slowed by about 4.5% as households reallocated spending to restaurants and other services. Gasoline sales edged lower but were 20% higher than a year ago on higher prices.

Year-to-date, sales in B.C. remained 17.9% ahead of last year’s pace while core retail sales remained 12% ahead of last year’s pace.

B.C. consumer price inflation (CPI) came in at a firm 3.5% year over year in September, which was consistent with August but well below the national reading of 4.4%. Provincial CPI rose for a fourth consecutive month.

Prices rose year over year in every major component in September, with notable gains in transportation (4.4%), shelter (5.2%) and food (3.5%). Energy prices, including electricity, natural gas, fuels and gasoline, rose 17.1% from last year. 

The rise in food prices in B.C. was led by food bought from stores, which increased 4% year over year led by higher meat prices (up 12.6% year over year). Restaurant prices gained 2.6%.

After a brief decline last month, rental costs rose by 1.6% and were 1.4% higher than a year ago. A return in international students has contributed to higher demand.

Increases in the prices of travel services and traveller accommodation partially reversed in September. Travel services prices fell 4.8% from the previous month, and the price of traveller accommodation was down 7.9%. The end of summer vacation and colder weather cooled down tourism in B.C. However, compared with costs a year ago, travellers still paid 26.1% more for accommodations travelling to B.C. and 12.8% more for travel services. •

Bryan Yu is chief economist at Central 1 Credit Union.