Though its economy is still running strong, Canada’s consumers are still feeling the impact of rising energy prices, steady inflation and the jump in credit costs. Statistics Canada reported retail sales through the month of May rose at a more restrained pace than economists had expected. A 0.4 percent pickup in the headline spending indicator fell short of the market’s 0.6 percent official consensus and an increase of the same magnitude from last month. When auto sales were excluded, the consumption report still rose 0.4 percent against a 0.7 percent forecast and 1.2 percent, upwardly revised improvement from the period before. Looking into the components of the indicator, it was clear that much of the strength in the indicator was a component of price and not demand. Gas station reciepts were the greatest contributor the overall report with a 2.4 percent jump after May’s 2.2 percent increase - as global prices for necessary goods were hitting record highs. With the help of the gasoline figure, autos rose 1.1 percent. On the other hand, food and beverage sales were unchanged even as global prices were still elavated. Elsewhere, discretionary building supplies and furniture/eletronic sales actually improvemed - by 0.7 percent and 0.3 percent respectively. Showing some signs of a frugal consumer though was the 0.7 percent slip in clothing sales - a modest decline following the 2.7 percent surge in the previous period. Overall, these indicators hold little surprise and are not that disappointing. Discretionary spending was likely to reflect rising prices and turning employment and wage trends. However, considering Canadians are still buying building materials and durable goods, the economy is still far from the position that the US is in. - John Kicklighter, Currency Analyst for DailyFX.com