Resilient retail sales despite the double whammy of elevated inflation and interest rates has been a key reason why the Canadian economy has avoided slipping into recession. That’s the good news.

The bad news: it’s hard to imagine a situation in which the high interest rate environment we are in (even if rates start to ease deeper in the year) does not eventually impede retail spending.

With this in mind, our latest forecast shows annual retail sales growth in Alberta slipping from 4.3% in 2023 to 3.6% in 2024 with real (inflation-adjusted) household consumption spending declining by 1.8% in per capita terms.

Sure enough, so far in 2024 (Statistics Canada released retail sales data for February today), the data are pointing to slower growth.

After a small pullback in January (-0.2%), seasonally-adjusted retail sales in Alberta fell by 1.1% in February. Sales have started 2024 below last year’s elevated levels (retail sales peaked in January 2023) mainly due to a pullback in gasoline and auto sales.

Nationally, retail spending decreased by 0.1% in February with sales lower in seven provinces. This was the second month in a row that national sales decreased.

When it comes to retail sales, two months of data is not enough to say that they will continue to contract, but it does provide a gut check that points to consumer fatigue and slower spending growth than we saw last year.

Answer to the previous trivia question: The last time the Edmonton Oilers won the Stanley Cup was in 1990 against the Boston Bruins.

Today’s trivia question: What is the seating capacity of Rogers Place for Edmonton Oilers games?