Canada’s retailers posted poor sales in the peak December shopping period, Statistics Canada said today.

Consumers reduced their spending in stores by 1.4% in December to $29.2 billion, after a thin drop of 0.1% in November.

However, December’s retail sales were 6.6% higher compared with the same month of 2003.

StatsCan says Sales plunged 2.7% during December in the food and beverage sector, as ongoing labour disputes at the Société des alcools du Québec and in the National Hockey League contributed to a 12.1% sales drop at beer, wine and liquor stores. Sales of alcoholic beverages to bars, restaurants and supermarkets are included in those figures.

Statistics Canada also said the increasing popularity of gift cards, which are considered as sales only when they are redeemed, may have also played a role in December’s weak retail sales.

Sales of new cars dropped 3.4% while sales at gas stations were off by one% due to lower gasoline prices.

“Christmas spending is now spread out with the proliferation of gift cards, so one month doesn’t make a trend,” said Sherry Cooper, BMO Nesbitt Burns chief economist, in a written commentary.

“Still, this report will keep the Bank of Canada firmly on the sidelines. There is not enough here to prompt a rate cut, but there is also no reason to seriously consider restarting the process of removing the ‘considerable monetary stimulus,'” she said.

For all of 2004, retailers experienced their fifth-best annual sales gain of the last 10 years in 2004. Overall sales advanced five% in 2004 compared with 2003, when sales rose 3.8%.