Romania's retail sales slow down to +1.8% y/y in Q2
<p>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.</p>

<p>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.&nbsp;</p>

<p>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.&nbsp;</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.&nbsp;</p>

<p>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.&nbsp;</p>

<p>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.</p>

<p><em>iulian@romania-insider.com</em></p>

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