Romania’s retail sales volume index contracted by 4.1% in August after a 5.4% y/y advance in July (revised from +5.3% y/y), the statistics office INS announced on October 6. The sudden slowdown in August was expected and it probably overstates the fundamental deceleration in the private consumption as an effect of higher VAT rate and higher excise duties enforced as of August 1 but particularly reflecting gloomier consumer sentiment induced by the ongoing fiscal consolidation policies.
For July-August, the retail sales maintained a slight positive growth rate (+0.6% y/y), supported by 4.6% y/y higher car fuel sales and +1.1% y/y sales of non-food goods, while the food sales dropped by -2.2% y/y.
Probably the weaker retail sales in August reflect in-advance purchases made in July ahead of the VAT rate hike. However, private consumption is expected to slow down for the coming quarters at least until the end of 2026, particularly as the government seeks to keep the pensions and wages in the budgetary sector steady for another year, despite the inflation likely to reach 10% at the end of 2025.
In seasonally and adjusted terms, the retail sales index contracted by 4.0% m/m and furthermore the INS revised the growth rate in July from +0.3% m/m to -0.7% m/m. The 1 negative percentage point was operated despite the +0.1pp revision of the unadjusted index and reflects the quick changes in the assumed seasonal pattern from one month to another. Furthermore, this indicates the weak reliability (the capacity of reflecting actual economic development rather than accounting figures) of the seasonally adjusted series during periods of ample shocks (such as the Covid-19 crisis or the war in Ukraine).
In broader terms, the retail sales of all three categories had stagnated throughout 2025 until the August slowdown.
In 2024, the non-food sales saw an outstanding 14.8% increase, while the food and car fuels sales increased more moderately by 3.8% and 3.6% respectively, resulting in an average 2.6% y/y increase in the retail sales volume.
In the first half of 2025, the retail sales still increased by 2.6% y/y thanks to a high level of non-food sales (5.9% y/y) maintained after the sharp rise in H2 last year. The food sales, however, contracted by 1.2% y/y, reflecting the more cautious spending of the low-income households hit by the frozen pensions and wages in the budgetary sector.
The car fuel sales increased by 2.2% y/y in H1 this year in response to more affordable prices.
iulian@romania-insider.com
(Photo source: Tero Vesalainen/Dreamstime.com)
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