Canadian retail sales fell 1.8% to $57 billion in December as the spread of the Omicron variant and severe flooding in British Columbia and the Atlantic provinces disrupted transportation, operations retail and sales, Statistics Canada announced Friday.

It’s the biggest drop since last April, when regions across the country implemented tougher COVID-19 restrictions, the agency said.

The drop was even bigger after removing the impact of higher prices, with retail sales volumes down 2.5% in December, said TD Economics economist Ksenia Bushmeneva.

“Retail sales ended the year on a weaker base as public health restrictions weighed on mobility and spending in December,” she said in a client note.

Sales fell in eight of 11 subsectors, accounting for 62.9% of retail trade, Statistics Canada said.

Sales at clothing and clothing accessories stores fell 9.5%, while furniture and home furnishings stores reported an 11.3% drop in sales.

Core retail sales — which exclude gas stations and motor vehicle and parts dealerships — fell 2.4%, the agency said.

Gas station sales fell 3.2% in December, the first drop in three months, as tighter public health restrictions due to the Omicron variant weighed on gasoline demand.

Retail e-commerce sales also fell in December, down 14.2% year-over-year to $4.1 billion in December, or 6.5% of retail e-commerce. total detail.

Statistics Canada’s preliminary estimate for January pointed to a 2.4% increase in retail sales for the month, but the agency warned the figure would be revised.

Easing restrictions and gradually improving supply chain bottlenecks should lead to improved store footfall and retail sales over the next two months, TD Economics’ Bushmeneva said.

Still, beyond the initial rebound, she said the outlook for retail sales was mixed.

“The easing of public health restrictions should encourage consumers to shift their spending from goods to services, such as travel, dining and entertainment,” Bushmeneva said.

“A rebound in services spending, alongside rapidly rising consumer prices and rising interest rates, will leave less room in household budgets to spend on goods this year.”

The Canadian Press

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