Canadian retail sales experience June swoon

• Canadian retail sales unexpectedly fell in June, reinforcing the likelihood that growth contracted in the second quarter as the economic malaise hit the consumer, a key pillar of support in recent years.

Separately, the annual inflation rate cooled as expected in July, according to data released by Statistics Canada on Friday, pulled down by cheaper gasoline prices, even as the cost of food and shelter climbed.

The 0.1- per- cent decline in June retail sales was well short of economists’ expectations for a 0.5-per-cent gain. May’s sales were revised down to show no change from an initially reported 0.2-per-cent gain.

“It j ust suggests t hat maybe the Canadian consumer is growing a bit tired of carrying the burden of growth,” said David Watt, chief economist at HSBC.

Nonetheless, economists do not expect consumers are down for the count yet, particularly with the additional money they are getting from the government in the form of a revamped child benefit.

“With Ottawa sending out the first of the Child Care Benefit checks in July, there’s reason to be optimistic on the second half of the year,” Nick Exarhos, economist at CIBC, wrote in a note.

The economy likely contracted in the second quarter, partly due to May’s wildfires in northern Alberta that forced residents to evacuate and disrupted oil production.

Although the data underscored weakness in the economy in the second quarter, analysts and policy- makers still expect growth to rebound in the third quarter.

After cutting interest rates twice last year in the face of the oil-price slump, the Bank of Canada is seen holding rates where they are until late 2017.