Romania’s retail sales volume index increased by 1.8% y/y in the second quarter of the year (Q2), decelerating from +3.5% y/y in Q1 and +8.6% y/y in 2024, according to data published by the statistics office INS. In seasonally-adjusted terms, the sales volume inched up by 0.2% q/q in Q2, after a similarly moderate advance in Q1.
The retail sales have increased significantly last year, but the fiscal and budgetary reform packages will likely moderate the growth rate at least in the coming quarters, not before a jump expected in July in advance of the August 1 VAT rate hike.
For the whole of 2025, Erste Research estimates a +2.3% rise in retail sales volume in Romania. Persistent high inflation and frozen wages are likely to lead to negative real wage growth in the public sector this year, following a double-digit (+12.5%) real growth in 2024. The real wage growth for the entire economy could be close to zero in 2025 vs +7.4% advance in 2024.
Speaking of monthly readings, retail sales inched up by +1.1% m/m and +2.5% y/y in June, the slowest annual pace in one and a half years.
Actual data came above Erste Research’s forecast of -0.8% m/m and +0.5% y/y. The financial group explains that its estimate is based on consumer confidence and business evolution reported by managers in the retail trade sector; therefore, it seems that the actual development reflected an overreaction in the soft data to expected fiscal measures.
Business and consumer confidence indices have deteriorated significantly in July, heralding the negative mood expected for the following quarters. Retail trade confidence dropped to -5.5 (balance of managers’ net positive responses, in percentage), the lowest level since the end of the first wave of the Covid-19 pandemic. Consumer confidence posted the sharpest deterioration, with the balance plunging to -31.4, its lowest since June 2022 during the outbreak of the war in Ukraine.
The economic uncertainty already made an impact on households’ consumer confidence in Q2. The non-food sales, the segment best reflecting the consumer confidence, contracted by 0.6% q/q while the annual increase eased to +4.2% y/y from +7.8% y/y in Q1 and +14.8% y/y in 2024.
The food sales rose by +1.7% q/q in Q2, reversing a -2.3% q/q decline in Q1. In annual terms, the households purchased fewer food goods both in Q1 (-0.4% y/y) and in Q2 (02.0% y/y). The volume of retail sales has been less sensitive to households’ rising revenues over the past several years, when they increased by rates of around 3%-4% per year.
The car fuel sales posted moderate growth rates of +0.4% q/q and +0.6% y/y in Q2, along with rather volatile dynamics over the past years, broadly reflecting the prices but not necessarily a particular upward or downward trend.
iulian@romania-insider.com
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