Retail spending booming in B.C., despite rise in inflation

Despite record gas and grocery prices, driven, in part, by inflation rates we haven’t seen in more than three decades — it’s not stopping British Columbians from spending, big time.

This week Statistics Canada released a breakdown when it comes to retail sales and B.C. is not only leading the country but outpacing other provinces and territories.

“For example, retail sales in March 2020 (unadjusted for seasonality) were $43.6 billion, in March 2021 were $56.9 billion, and in March 2022 were $59.2 billion,” says Greg Wilson with the BC Retail Council.

He says the surge in spending is exactly what businesses, restaurants, and tourist hot spots, which have struggled for the last two years, have been waiting for.

“Things have recovered over time but it’s clear that now with a lot more people in Downtown Vancouver and cruise ship tourists returning, that what we’re seeing is a return to a more normal pattern and so that will be relieving for thousands of retail merchants who are dependent on those customers.”

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He adds certain sectors are doing really well, luggage sales for example, likely because people are travelling once again. Clothing, jewelry, and shoes are also seeing a lot of return.

“I think what you’re seeing is a rebalancing that people are returning to a more normal pattern of expenditure. People didn’t need to buy nicer clothing to go out, nicer clothing for work. They didn’t buy their lunch at a neighbouring coffee shop or restaurant to their office building. When you’re a tourist you tend to eat out and in the areas near the attractions and in Downtown Vancouver, near the cruise ship terminals and I think that those patterns have returned to a bit more normal. If you’re a business that’s dependent on those customers, that must be a tremendous relief, that’s what we hear from merchants that we talk to that are in those segments,” adds Wilson.

You may be wondering are people actually spending more or is it just that everything is costing more?

“It’s because we’re buying more. There’s no question that things are costing more. I mean… people are buying more, that is generally the trend. Yes, costs are rising but the cost rises are incremental. They are significant to us when we’re going and buying goods, but overall, it’s only five per cent and the increase in sales in Vancouver is more like nine per cent,” says Wilson.

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These figures don’t include online sales, although Statistics Canada does track e-commerce figures.

What’s happening in B.C., is happening right across the U.S. as well where consumer spending is going up.

The inflation figure that the Commerce Department reported Friday was below the four-decade high of 6.6 per cent that was set in March. While high inflation is still causing hardships for millions of households, any slowing of price increases, if it can be sustained, will provide some modest relief.

The report also showed that consumer spending rose by a healthy 0.9 per cent from March to April, outpacing the month-to-month inflation rate for a fourth straight time. The ongoing willingness of the nation’s consumers to keep spending freely despite inflated prices is helping sustain the economy. Yet all that spending is helping keep prices high and could make the Fed’s goal of taming inflation even harder.

Consumers’ resilience in the face of sharply higher prices suggests that economic growth is rebounding in the current April-June quarter. The economy shrank at a 1.5 per cent annual rate in the first quarter, mostly because of an increase in the trade deficit. But analysts now project that, on an annual basis, it’s growing as much as three per cent to four per cent in the current quarter.

High inflation appears to be forcing consumers, on average, to save less. The savings rate fell to 4.4% last month, the lowest level since 2008. But overall, Americans built up an additional $2.5 trillion in savings since the pandemic, and economists calculate that that pile is eroding only slowly. As a result, healthy spending could continue for months.

With files from The Associated Press