Canadian retail sales fell 0.2 per cent to $66.4 billion in March. Excluding volatile items, sales were down 0.6 per cent on a month-over-month basis. In volume terms, adjusted for rising prices, retail sales fell 0.4 per cent in March.

After rising more than 1 per cent in February, retail sales in BC were down by 0.4 per cent in March and were down by 0.4 per cent from the same time last year. In the CMA of Vancouver, retail sales were down 0.1 per cent from the prior month and were up 1 from March 2023.

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Canadian prices, as measured by the Consumer Price Index (CPI), rose 2.7 per cent on a year-over-year basis in April, down from a 2.9 per cent increase in March. Month-over-month, on a seasonally adjusted basis, CPI rose by 0.2 per cent in April. The deceleration in headline CPI was driven by softening food, services, and durable goods prices, but was moderated by an uptick in gasoline prices (up 6.1 per cent year-over-year). Excluding energy costs, CPI rose 2.5 per cent year-over-year in April, down from 2.8 per cent in March. The shelter cost index remains the major driver of inflation with the rate of increases higher now (6.4 per cent) than they were this time last year (4.9 per cent). Mortgage interest costs were up 24.5 per cent and rent was up 8.2 per cent from the same time last year in April. Excluding shelter, consumer prices rose just 1.2 per cent, year over year. In BC, consumer prices rose 2.9 per cent year-over-year, up from 2.7 per cent in March. The Bank of Canada's preferred measures of core inflation, which strip out volatile components, fell to between 2.6 and 2.9 per cent per cent year-over-year in March.

Canada's inflation rate continued to trend in the right direction in April, hitting the slowest rate of appreciation since March 2021. The Bank of Canada's preferred measures of core inflation, CPI median and CPI trim, have now been below the 2 per cent target for two consecutive months when measured on a 3-month annualized basis. Food costs also appear to be normalizing, and the overall food price index is essentially at 2 per cent. The main problem within the CPI basket is now almost exclusively the shelter component; rent appreciation in particular is troublingly high and the rate of increase continues to rise. Excluding shelter from the CPI index and comparing prices on an annualized 3-month basis, price appreciation in Canada has been close to zero for about half a year. Overall, this report contained yet more good news on inflation and will support the Bank of Canada's case to lower its policy rate in June. The next rate announcement is on Wednesday, June 5th.

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Canadian employment rose by 90,400, or 0.4 per cent, to 20.491 million in April. The unemployment rate was unchanged at 6.1 per cent. Average hourly wages rose 4.7 per cent year-over-year to $34.95 last month, while total hours worked were up 1.2 per cent from April of last year.

Employment in BC rose 0.8 per cent to 2.871 million, while employment in Metro Vancouver rose 0.7 per cent to 1.627 million in April. The unemployment rate fell 0.5 points in BC to 5 per cent while falling in Metro Vancouver by 0.3 points to 5.3 per cent last month.

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Canadian real GDP grew 0.2 per cent in February, following a 0.5 per cent increase in January. The growth was driven by services-producing sectors (+0.2 per cent), led by growth in rail, air, and pipeline transportation. Residential construction activity fell by 0.5 per cent, declining for the fourth consecutive month following a burst of activity in the summer and fall of 2023. Cooler home sales caused GDP from offices of real estate agents and brokers to fall 1.9 per cent last month, undoing some of the growth in December and January. Preliminary estimates suggest that output in the Canadian economy was essentially unchanged in March.

Amid cooling inflation and weakening labour markets, February's rather soft GDP report provides additional support for the broadly anticipated beginning of rate cuts in June. Although growth appeared strong in January, this was largely due to the conclusion of public sector strikes in Quebec, which caused a temporary boost to growth. Meanwhile, February's growth came in cooler than expected and the preliminary estimate for March is for zero growth. Markets currently expect the Bank to make its first overnight rate cut since early 2020 at its next meeting on June 5th. 

Copyright British Columbia Real Estate Association. Reprinted with permission.