The initial burst of COVID-19’s Omicron wave coupled with last year’s catastrophic flooding in southern B.C. sent retail sales falling in December, according to data released Friday from Statistics Canada.
While retailers always bank on the holiday shopping season to cap off every year, sales across the province fell 1.4 per cent to $7.8 billion between November and December 2021.
The monthly drop in sales was even steeper in Metro Vancouver, falling 1.6 per cent to $3.5 billion. Annually, sales grew 3.3 per cent across the province amid the pandemic recovery.
“Severe flooding in British Columbia and the Atlantic provinces in November 2021 damaged infrastructure and led to evacuations in affected regions, resulting in major disruptions to the business operations of retailers across the country,” Statistics Canada noted in its report.
“Based on respondent feedback, 15 per cent of retailers continued to be impacted in December by the floods and evacuations in British Columbia.”
The national statistics also noted the Omicron wave weighed on retailers across Canada, as sales nationwide fell 1.8 per cent to $57 billion.
"Still, it looks like sales bounced back in January despite continued restrictions,” BMO economist Shelly Kaushik said in a note (Statistics Canada will release January data next month).
“Consumer demand appears to be resilient, though persistently strong inflation is eroding purchasing power.”
Inflation hit 5.1 per cent in January – a high not seen since 1991.
TD economist Ksenia Bushmeneva said the outlook on retail looks mixed moving forward even after the country ultimately ended 2021 with sales up 8.6 per cent compared with a year earlier.
“Easing public health restrictions are expected to prompt consumers to redirect their spending away from goods and toward services, such as travel, dining out and entertainment,” she said in a note.
“A rebound in spending on services, alongside rapidly rising consumer prices and higher interest rates will leave less wiggle room in households' budgets to spend on goods this year. That being said, consumer spending as a whole is still expected to remain healthy, supported by pent-up demand, elevated savings and significant wealth gains accumulated during the pandemic.”
