By Courtney Tower

OTTTAWA (MNI) - Canadian retail sales slumped far below expectations in July, by -0.6% to C$34.18 billion, mostly because of lower prices at gasoline stations, Statistics Canada reported Tuesday.

Against the trend, both in retail sales which had risen in five of the first seven months of this year and in other economic indicator areas which have shown healthy recent increases, July sales were down in five of the eight retail sectors recorded.

The overall -0.6% drop in current dollars followed gains of 1.0% in June, and 1.1% in May, and belied a consensus estimate by analysts of +0.5% for the month while some such as TD Financial Group expected an increase of 1.5%. Total retail sales now are down 4.9% over the past 12 months, against -4.4% in June.

Retail sales excluding autos, but not gasoline, fell 0.8% from June and increased the 12-month decline from 3.6% to 4.7%.

For the automotive sector overall, the 1.0% decline in sales was due to a 3.4% fall at gasoline stations because prices dropped. Gasoline sales now are down 27.6% over the past year. However, sales at new car dealers (+0.2%) increased for the third consecutive month ---- a figure lower than the rise in unit sales reported by the New Motor Vehicle Sales Survey, Statistics Canada said, because "some of the increase in the number of units sold came from lower valued vehicles."

Used and recreational vehicles and parts dealers (+0.1%) "posted relatively stable sales after strong increases in May and June," the agency said.

The largest percentage decline was felt in the food and beverages sector (-1.5%), representing various store types. Sales at furniture, home furnishings and electronics stores fell 0.6% after two months of increases. Clothing and accessories stores were down 0.5% and miscellaneous retailers were down 0.4%

The largest increase was a 1.1% rise in sales at pharmacies and personal care stores, continuing a rising trend. A 1.0% increase at building and outdoor home supplies stores more than offset the 0.6% decline the previous month. General merchandise store sales were up 0.6% after having been "relatively flat" since last October, Statistics Canada said.

Retail sales were down in all provincves in July, "reflecting the impact of price-induced lower sales at gasoline stations," the agency said.

** Market News International Ottawa **