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Retail sales dropped in December amid Omicron lockdowns

Retailers sold 2.1 per cent fewer goods in December, Statistics Canada estimates

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OTTAWA — Canadian retail sales most likely fell by 2.1 per cent in December as authorities imposed restrictions to fight the Omicron variant of the coronavirus and retailers faced challenges, Statistics Canada predicted on Friday.

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Statistics Canada also said retail sales rose 0.7 per cent in November, which was less than the 1.2 per cent gain forecast by analysts.

The flash estimate for December was based on responses from 50.6 per cent of companies surveyed. The average response rate is 90.0 per cent.

Statscan also said some shoppers decided to pull forward their purchases to November to avoid shortages caused by endemic supply chain issues.

Andrew Grantham, senior economist at CIBC Capital Markets, said the December dip was a little larger than he had expected.

“Bricks-and-mortar retailers will have likely continued to struggle in January due to Omicron-related restrictions and staff shortages,” he said in a note.

This weakness, he suggested, might “tip the scales slightly” in terms of persuading the Bank of Canada to hold steady when it makes a rate announcement on Jan 26. Money markets see about a 70 per cent chance that the central bank will lift its key overnight rate from the current record low 0.25 per cent.

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