Romania’s retail sales, hit by the VAT rate hike in August 2025 and shrinking once again in the first two months of 2026, have partly recovered in March when the sales volume index edged up by 2.6% m/m while the annual dynamics (-2.3% y/y) remained in the negative area for the eighth consecutive month, according to data published by the statistics office INS.
For the whole first three months of the year (Q1), the retail sales volume index edged down by 1.6% q/q, marking the third consecutive contraction, while the annual dynamics reached -5.8% y/y – the sharpest drop since the first Covid pandemic lockdown.
Consumer confidence declined sharply in April to -35.1 vs -32.2 previously, recording the fifth consecutive month below 2020 pandemic lows and reaching the lowest level since 2011, as remarked by Erste Group in a research note. Expectations on future financial situation, future economic situation, and assessment of past financial situation dropped in April compared to March. Future major purchasing intentions were the only component that improved this month.
The consumer sentiment remains weak amid rising inflation, expectations for even higher prices in the future, and limited wage hikes. The second round effect of the higher fuel price and the currency weakening in May is expected to exert inflationary pressures, while the households’ nominal incomes remain constrained by the fiscal consolidation and the general bleak economic outlook.
However, despite the recent negative correction, Romania’s retail sales in Q1 remain superior to those in 2023 – before the surge stimulated by expansionary income policies in the electoral year 2024.
The partial improvement in the private consumption in March was driven by the +2.7% m/m advance of the non-food sales, which still mark the deepest annual decline (-6.4% y/y) on solid advance accumulated in the quarters before the recent negative correction (particularly during the 2024 surge in consumption).
Surprisingly, the retail fuel sales rose by 6.2% m/m and surged by 11.3% y/y in the first month after the Middle East conflict pushed up the prices. Filling up the tank and making extra reserves amid constantly rising prices may explain the rise without actual higher consumption.
When it comes to the food sales, best reflecting households’ financial constraints, the retail volume maintained a negative pattern: -1.6% m/m and -3.4% y/y.
On a slightly broader perspective, the food sales remained roughly constant since their decline in August 2025 – as opposed to the non-food sales that have gradually reduced throughout the entire 2025 year to continue this pattern through Q1 2026 despite increased volatility. The fuel sales have somehow followed the same pattern as the non-food sales.
iulian@romania-insider.com
(Photo source: Tero Vesalainen/Dreamstime.com)
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