By David Ljunggren

OTTAWA, (Reuters) – Canadian retail sales fell 2.1% in December after authorities imposed strict measures to combat the Omicron coronavirus. Retailers faced difficulties as well, Statistics Canada forecasted on Friday.

Statscan also reported retail sales increasing 0.7% in November. That was less than what analysts had predicted at 1.2%.

Based on the responses of 50.6% companies, we calculated December’s flash estimate. A 90.0% average response rate was achieved.

Statscan reported that some customers opted to move their orders to November in order to prevent shortages due to endemic supply chains.

Andrew Grantham of CIBC Capital Markets was a senior economist and said the December dip wasn’t as large as he anticipated.

He stated in a note that brick-and-mortar stores would likely continue to struggle in January because of Omicron-related restrictions, staff shortages and other factors.

The weakness could “tippe the scales somewhat” to persuade Bank of Canada to keep its rate steady on Jan 26, he said. There is a 70% chance the central bank will raise its overnight key rate, which currently stands at 0.25%. {BOCWATCH]

The bank previously stated that it might raise interest rates as soon as April.

Stephen Brown, senior Canada economist with Capital Economics, stated that the December sales decline was more than 2.1% due to Omicron’s rapid growth.

November’s gains were fueled by increased sales at gas stations and dealers of building materials, gardening equipment, and supplies.

Six out of eleven subsector sales rose, accounting for 63.8% in retail trade. Volume terms, retail sales rose 0.2%.

Canadian Dollar traded at 0.1% below the greenback’s 1.2520, which is 79.87 U.S. Cents.