Data released on Tuesday showed retail sales in Canada dropped in September by 0.5%. Analysts at CIBC point out the biggest decline comes from gasoline and is linked to lower prices during the month, making sales fared a little better in volume terms with a 0.1% decline. They add the advance estimate for October shows a healthy bounce back of 1.5%, suggesting that consumer spending on goods is still fairly robust. 

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“The third quarter may have represented a modest giveback of prior strength in terms of retail sales volumes, but with spending on services continuing to recover the consumer is still expected to have been a positive contributor to overall GDP growth in Q3.”

“The advance estimates for October retail, wholesale and manufacturing suggest that the fourth quarter has started with a little more momentum than we previously anticipated, and placing some upside pressure on ours and the Bank of Canada's GDP forecast (+0.5% annualized) for Q4. However, it is early days, and the impact of past interest rate hikes on consumer spending will only grow in the coming months and quarters.”