Romania’s retail sales (volume terms) increased by 5.7% y/y in May, marking a visible slowdown from the outstanding +14.7% y/y in April, according to data published by the statistics office INS. The slowdown was also seen in the 0.3% m/m decline, calculated based on workday and seasonally adjusted terms.

However, the annual growth rate for the combined period April-May (+10.1% y/y) is a more accurate description of the intensity of private consumption because it eliminates the effects of different Orthodox Easter dates in 2024 and 2023 (not fully reflected by the workday number).

The annual growth in the combined two-month period comes after a significant +6.4% y/y advance in Q1, setting grounds for even more robust performance in Q2. The better y/y advance in Q2 will partly reflect low base effects, however, and the seasonally-adjusted retail sales edged up only marginally in April-May compared to Q1.

Speaking of the specific market segments, the sales of non-food goods remain at record levels (+7.9% y/y) despite a 1.2% m/m decline in May. The non-food sales (seasonally adjusted terms) leaped up in January (+8.4% m/m) and remained at high levels in the first five months of the year, pushing up the overall retail sales index. For April-May, the y/y advance was +14.7% (+12.3% y/y in Q1).

A faster real advance of wages since last October combined with robust consumer lending (helped to some extent by lower interest rates) in 2024 may explain the sudden increase in the purchase of non-food goods. 

Another possible explanation is inaccurate measuring (under-estimating) the consumer prices or consumption’s shift towards upper-end categories of goods. Although only a hypothesis, the scenario is increasingly explored by economists.

Food sales increased by 6.2% y/y in April-May, faster than the +1.7% y/y advance in Q1.

The sales of car fuels rose by 7.0% y/y in April-May, compared with +2.7% y/y in Q1.

iulian@romania-insider.com

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