(Ottawa) Sales at Canadian retailers were stronger than expected in April as consumers showed resilience in a tough economic environment, but that momentum is expected to slow, analysts have warned.

Retail sales rose 1.1% to 65.9 billion in April, Statistics Canada said on Wednesday, which had originally estimated growth of 0.2% for the month.

That growth was fueled by gains at general merchandise retailers and food stores, the federal agency said.

Statistics Canada said it now expects retail sales growth of 0.5% for the month of May, while warning that this preliminary data will be revised before its official release, in a month.

Bank of Montreal economist Shelly Kaushik said the numbers showed Canadian consumers continued to spend, but “higher prices [had] been driving most of the increase.” , since spending volumes grew at a much slower rate.”

Expressed in volume, retail sales rose 0.3% in April.

“Consumer spending momentum is expected to moderate in the second half of the year as even higher interest rates and still-high inflation continue to weigh on purchasing power,” Kaushik wrote in a report.

The Bank of Canada raised its key rate by a quarter of a percentage point earlier this month to 4.75%, a move that prompted the country’s major banks to raise their prime rates.

The central bank has raised concerns that inflation appears to be more persistent than expected and bringing it back to its 2.0% target will be more difficult.

Retail analyst Bruce Winder said he expects April’s retail sales numbers to decline or increase minimally.

“We were all expecting a change just because there are so many headwinds,” he observed.

“There are interest rates. Inflation, especially in food, is still high. There are job losses in the technology sector, there are many things that work against the consumer. »

He also noted that consumers were at “an all-time high in household debt,” particularly after a period of high spending in the wake of the pandemic.

“I thought they would take a break. But that’s something we’re seeing as a bit of a surprising resilience in consumer spending,” Winder continued.

“Is it because credit is so readily available? Is it because consumers still have some of that [post-pandemic] spending they want to make? »

Mr. Winder said it was possible that the increase was also linked to factors such as population growth, as well as Canadians increasingly returning to the office, causing them to spend more on goods.

According to Statistics Canada, sales at general merchandise retailers rose 3.3% in April, while those at food retailers rose 1.5%.

Sales at motor vehicle and parts dealers rose 0.5% in April, led by a 3.7% increase at used car dealers and a 3.5% increase at retailers parts, tires and accessories for motor vehicles.

Sales at furniture, home furnishings, and electronics and appliances retailers fell 1.6%.

Core retail sales — which exclude gas stations and fuel dealers and motor vehicle and parts dealerships — rose 1.5% in April, Statistics Canada said.