Shoppers closed their wallets in September, with retail sales shrinking by 0.5%

Sales at Canadian retailers fell by more than they were expected to in September, another sign that consumers are keeping their wallets closed wherever possible in the face of high prices.

Statistics Canada reported Tuesday that retailers rang up $61.1 billion in sales during the month. That was a decling of 0.5 per cent from the previous month's level.

Economists had been expecting the figure to shrink from the previous month's level, but the numbers came in even lower than the 0.4 per cent decline that was anticipated.

Three quarters of all types of retailers saw sales shrink, led by gasoline stations (down 2.4 per cent) and food and beverage stores (down 1.3 per cent.)

"Much of the decline was due to prices, with volumes only down 0.1 per cent," Desjardins economist Tiago Figueiredo noted.

It wasn't just physical stores that felt the pinch during the month, as online shopping — which has seen exploded in popularity in recent years — also declined.

E-commerce sales declined by 5.4 per cent during the month, to $3.4 billion.

September's decline means for the third quarter as a whole, retail sales shrank by 1 per cent. That's the first quarterly contraction since mid-2020, when the pandemic began.

While September's numbers are undeniably weak, the early data for October looks very strong, with sales on track to increase by 1.5 per cent.

"Canadians tightened their belts in September but then opened their wallets in a big way in October," Figueiredo noted.