The monthly and year-over-year changes in retail sales provide general information on the strength of consumer spending. If sales are strong in all categories of spending, it indicates that people have both the money and the desire to increase consumption. Prices of goods or the volume of goods sold can affect sales, so it is important to consider how consumer prices moved over the relevant month. In particular, changes in the price of gasoline can have a large impact on monthly sales.
Sales of motor vehicles and furniture can be sensitive to interest rates—motor vehicles directly, while furniture sales will respond to the housing market. A strong market for new or existing homes will lead to higher demand for furniture and appliances. If sales of these items grow too quickly for too long, the Bank of Canada will use this as information that the economy has to cool down.
