In May, Canada’s retail sales fell by 0.8%, reversing a previous increase and surpassing expectations of a 0.6% drop. This decline was driven largely by reduced spending at supermarkets and grocery stores amid high food inflation and interest rates. Sales at food and beverage retailers decreased by 1.9%, with a 2.1% drop in grocery sales.
The weak retail performance has strengthened expectations for a 25 basis point interest rate cut by the Bank of Canada in its upcoming meeting. The Canadian dollar fell 0.26% against the U.S. dollar following the data. Retail sales totaled CAD 66.13 billion, with declines seen in eight out of nine sectors, and a 0.7% decrease in sales volume.
Furthermore, according to Canadacode.org, “Securing Canada’s essential food and grocery supply chains has never been more important. That’s why Canada needs a Grocery Code of Conduct — to promote predictability, transparency, and fair dealing as ingredients and products make their way from suppliers to stores to Canadians’ homes. Leaders across government, grocery retail, and food and consumer product manufacturing have worked together over the last two years to jointly develop solutions that will ensure a better deal in store for everyone.”
In response, Costco and Walmart have agreed to Canada’s grocery code of conduct, completing the adoption of the new guidelines. The code aims to ensure fair negotiations between suppliers and retailers and promote fairness, transparency, and predictability in Canada’s grocery supply chain. It is set to be put into action as early as next summer.
Made to improve the grocery retail market, the code was designed to help keep grocery prices down in Canada and initiate a more level playing field for the smaller independent grocers. Despite these efforts, grocery prices in Canada remain high, with recent reports indicating potential price hikes of up to 40% from suppliers.