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TD Bank economist Maria Solovieva said the balance of risks for the ºÃÉ«tv economy is slowly swinging to the downside as consumer confidence continues to be soured by the Bank of Canada's rate hikes and still elevated inflation.

"This certainly allows the bank to remain on the sidelines at next week's decision," Solovieva wrote in a report.

"We expect that moderating demand tempers inflation going forward, while keeping spending just slightly below sub-trend without sending disruptive ripples through the economy."

The Bank of Canada is set to release its next interest rate decision on Wednesday when it will also update its forecasts for the economy in its monetary policy report.

Private sector economists widely expect the central bank to keep its key interest rate target on hold at five per cent, the highest its been since 2001.

For August, Statistics Canada said sales at motor vehicle and parts dealers fell 0.9 per cent as sales at new car dealers dropped 1.1 per cent and used car dealers declined 0.5 per cent.

The agency said the largest increase in retail sales in August was at gasoline stations and fuel vendors as higher prices helped lift sales in the category 2.8 per cent. In volume terms, sales at gasoline stations and fuel vendors fell 2.9 per cent.

Statistics Canada said core retail sales — which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers — fell 0.3 per cent in August.

Sales at food and beverage retailers fell 1.2 per cent, while sales at sporting goods, hobby, musical instrument, book and miscellaneous retailers dropped 1.1 per cent.

Health and personal care retailers saw an increase of 1.2 per cent.

In volume terms, overall retail sales fell 0.7 per cent in August.

This report by ºÃÉ«tvwas first published Oct. 20, 2023.