In May, retail sales in Canada fell 0.8%, erasing a previous increase and beating expectations for a 0.6% decline. This decline was largely due to lower spending at supermarkets and grocery stores due to high food inflation and high interest rates. Food and beverage retail sales fell 1.9%, with grocery sales falling 2.1%.
The weak retail performance has increased expectations that the Bank of Canada will cut interest rates by 25 basis points at its upcoming meeting. The Canadian dollar fell 0.26% against the U.S. dollar following the release of the data. Retail sales totaled CAD 66.13 billion, with declines in eight of nine sectors and sales volumes down 0.7%.
Furthermore, Canadacode.org states: “Securing Canada's essential food and grocery supply chains has never been more important. That's why Canada needs a grocery store code of conduct – to promote predictability, transparency and fair dealing as ingredients and products make their way from suppliers to stores and into Canadians' homes. Leaders from government, grocery retailers and the food and consumer goods industry have worked together over the past two years to develop collaborative solutions that will give everyone a better deal in store.”
In response, Costco and Walmart have agreed to the Canadian Food Code of Conduct, completing the rollout of the new guidelines. The code is designed to ensure fair negotiations between suppliers and retailers and promote fairness, transparency and predictability in the Canadian food supply chain. It is expected to come into effect as early as next summer.
The Code was created to improve the food retail industry. It was designed to help keep food prices low in Canada and create a fairer playing field for smaller, independent grocers. Despite these efforts, food prices in Canada remain high, with recent reports suggesting possible price increases of up to 40% by suppliers.