Retail sales in Canada hit a record high of $27.4 billion in March, Statistics Canada reported today.

The 1.2% rise in sales in March followed increases of 2.6% in February and 1.7% in January.

For the first three months of 2004, sales were up 3% over the last quarter of 2003.

StatsCan said retail sales rose 1.1% in March and 2.7% in the first quarter of 2004 when measured in constant dollars, “an indication that sales growth was real and not inflated by higher prices.”

Excluding sales by motor and recreational vehicle dealers, retail sales rose 1% in March and 3.3% in the first quarter.

“For total retail sales excluding auto dealers, this was the largest quarterly gain in almost 17 years,” the statistical agency said.

BMO Nesbitt Burns chief economist Sherry Cooper said the Canadian economy stumbled at the start of the year, but has since recovered enough to keep the Bank of Canada from making any near-term interest rate changes.

“The Bank of Canada will remain firmly on the sidelines at the next two fixed action dates (June 8 and July 20), but the improved tone of the Canadian economy at the end of Q1, suggests that excess capacity is being used up and that a rate hike by the end of the year is quite possible,” Cooper said.

In a separate release, Statistics Can said March wholesale sales rebounded 4.6% to $37.6 billion in the strongest gain in the past 10 years, aside from the increase registered last September following the power grid collapse the previous month.

The increase in sales in March was mainly attributable to a 10.7% rise in the automotive sector, followed by lumber and building materials.

First-quarter wholesale sales were down 0.6% from the fourth quarter of 2003, a period that saw an increase of 2.8%.

Statistics Canada said the contraction of quarterly sales was mainly attributable to the automotive sector, which despite a strong showing in March experienced a sharp drop in activity in the first two months of the year.