Canada’s consumer prices advanced slightly to 0.9 per cent in May, while retail sales for April took a surprise decline. This signifies that the second-quarter recovery the central bank is depending on still remains uncertain.
Core inflation slowed to 2.2 per cent from 2.3 per cent in April, says Statistics Canada. April retail sales also fell 0.1 per cent, despite economists’ predictions that sales would rise 0.7 per cent for the month. Total inflation, while beyond April’s 0.8 per cent pace, is still outside the Bank of Canada’s one to three per cent target range.
The 0.1 per cent decline in April’s retail sales exceeded all economist forecasts, suggesting that the economic weakness seen in the first quarter from lower crude oil prices will linger into the second.
“The economy is going to remain sluggish,” says Doug Porter, chief economist at BMO Capital Markets. “The bigger surprise was definitely in retail sales.” CJ
