Retail sales volume contracted by 2.3% q/q in Q3, resulting in a 0.3% y/y decline in Romania (the second negative reading since the Covid-19 pandemic), visibly dragged down by the real wages that contracted by 3.7% y/y in July-August (latest data available) after +2.2% y/y in Q2, +4.6% y/y in Q1 and around 9%-10% y/y in the last three quarters of 2024, according to data published by the statistics office.
The rise in employment weakened to +0.1% y/y in July-August, after the employment dynamics had contributed to consolidating the households’ budgets in the past: +0.6% y/y in H1, +0.7% y/y in 2024, and +1.3% y/y in 2023.
With the retirees and employees in the budgetary sector seeing their nominal incomes frozen by the end of 2026 amid rising consumer prices, and the employees in the private sector seeing their workplaces at risk due to economic slowdown, the consumer confidence can only diminish.
By category of goods, the food sales saw the steepest decline in Q3: -3.1% y/y and -2.6% q/.q. The effect of the budgetary measures enforced by the government in July-August had a regressive effect, impacting particularly the low-income households, and this is typically seen in the food sales.
The sales of non-food goods still increased by 0.4% y/y, but declined by 1.8% q/q.
The car fuels, counted separately from the non-food sales, demonstrated once more their weak correlation with households’ incomes and increased by 3.3% y/y in Q3 (+0.2% q/q).
Regarding the monthly data, the retail sales have partly recovered in September (+1.3% m/m) after the steeper 4.0% m/m plunge in August, prompted by the VAT rate hike and the 0.7% m/m decrease in July following the electricity prices increase.
The official Q3 data from the statistics office confirms the fast-moving consumer goods (FMCG) sales data compiled by NielsenIQ recently, which still show +1.1% y/y advance of the FMCG in Q3 – yet a visible slowdown from +3.6% y/y in Q2 and +5.0% y/y in Q1. The consulting company explained that it measured the actual purchases in stores, and the buyers have adjusted their choices towards budget brands to address the rising prices and gloomy income expectations.
The statistics office data, due to the methodology used, does not capture such effects. For instance, the average FMCG prices reported by NielsenIQ increased by only 3.5% y/y in Q3, compared to a 7.9% y/y rise in the food goods and a +11.1% y/y surge of the non-food goods (which include electricity and other non-FMCG items).
iulian@romania-insider.com
(Photo source: Tero Vesalainen/Dreamstime.com)
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