Retail sales fell 0.8% to $69.6 billion in July as shoppers spent less at supermarkets and grocery stores, Statistics Canada said Friday.
The agency said its advance estimate for August pointed to an increase of 1%, though it cautioned the figure will be revised.
Retail sales in July were down in eight of the nine subsectors it tracks, with motor vehicle and parts dealers the only group to increase, up 0.2%.
TD Bank economist Maria Solovieva said volatility in the data remains exceptionally high.
“Cooling employment and softer wage gains are likely to catch up with consumers in Q3, reinforcing a more frugal mindset,” Solovieva wrote in a report.
“While wealth effects could continue to buoy services spending among higher-income households, another leg up in domestic tourism and related spending appears unlikely. Goods demand, meanwhile, looks set for a sizable contraction, with vehicle sales likely to pull back in the third quarter.”
Sales at food and beverage retailers fell 1.3% in July, with sales at supermarkets and other grocery retailers down 2.5%.
Sales at clothing, clothing accessories, shoes, jewelry, luggage and leather goods retailers dropped 2.9%.
Core retail sales — which exclude gasoline stations, fuel vendors and motor vehicle and parts dealers — fell 1.2% in July.
In volume terms, retail sales dropped 0.8% in the month.
The retail sales figures followed a pair of Statistics Canada reports earlier this week that said both manufacturing and wholesale sales climbed in July.
On Wednesday, the Bank of Canada cut its key interest rate by a quarter of a percentage point to 2.5%, citing concerns about a weakening economy.
Canada lost 66,000 jobs in August, adding to a loss of 41,000 in July.