Canadians curbed spending in January with retail sales falling 1.7%

Canadians curbed their shopping habits in January, spending less on almost everything, including low-priced gasoline.

Savings on gasoline aren't going toward autos or other consumer goods

Statistics Canada figures show Canadians cut back on their spending in January, with retail sales falling 1.7 per cent. (Robert F. Bukaty/Associated Press)

Canadians curbed their shopping habits in January, spending less on almost everything, including low-priced gasoline.

After a December in which retail sales pulled back by 1.8 per cent, retail spending was down 1.7 per cent from the previous year in January, according to Statistics Canada.

The dollar value of sales at gasoline stations fell 8.8 per cent in January, reflecting lower prices paid at the pump. This was the seventh straight month of decreases in gasoline sales.

But consumers did not go out and spend their gas savings at the mall or grocery store. Retail sales excluding gasoline declined by 0.8 per cent from the previous month, with steep drops in spending on motor vehicles and parts, food and beverage and general merchandise.

One of the few areas where Canadians were willing to shell out more was on electronics and appliances, where retail sales were up 3.8 per cent on the month and seven per cent on the year. January is often a month when appliances and electronics go on sale.

TD economist Brian DePratto said gasoline savings aren’t helping boost consumer spending in part because of low wage growth in Canada.

“The weak income growth that many Canadians are seeing appears to be offsetting these savings somewhat. As a result, we expect only slight growth in consumer spending in the first quarter of 2015 as auto sales are expected to decline outright,” he said.

The other complicating factor is high consumer debt, with Canadians repeatedly warned to cut back on credit card use.

Motor vehicles and parts had a banner year in 2014, with annual sales growth from January 2014 rising to 6.2 per cent. But they fell 1.4 per cent on the month, seeming to bear out a prediction from analysts that auto sales cannot keep growing at the same rate in 2015.

Retail sales fell in every province but Prince Edward Island, with significant sales drops were in Alberta, where a decline in spending power because of cutbacks in the oil patch led to a 2.8 per cent decline in retail sales.

However, spending was also down in the two provinces meant to get the most benefit from cheaper oil, Quebec saw a retail sales drop of 2.4 per cent and Ontario, 1.8 per cent.