Romania’s seasonal and workday adjusted retail sales index edged up marginally (+0.1%) in July, compared to June, and remains at historically high levels.

During the first part of the year, the rally was driven by hopes (consumer confidence) for no more Covid waves. The rising energy prices already seen as of July and expected to intensify during the winter, as well as the rising interest rates and inflation, may significantly dampen the retail sales impetus toward the end of the year.

In annual terms, the retail sales index rose by 6.3% (YoY) while being 13.0% above the level as of July 2019, consistent with a 6.3% annualised growth.

Under a broader perspective, consumption has already returned to pre-crisis growth rates and (in absolute terms) not far from where it would have been in the absence of the Covid crisis (assuming a steady growth rate).

The recovery was nearly complete in the non-food segment (+9.4% YoY as of July and +10.2% annualised over the past 24 months). In the food sector, the sales increased by 6.8% YoY and by 5.8% annualised over the past 24 months.

The fuel sales witnessed the slowest and incomplete recovery: +0.7% annualised over the past two years, despite the +5.3% YoY advance.

Private consumption is broadly expected to drive the economic growth this year when it is projected by the state forecasting body CNP to rise by 8%, fully reversing the 5.2% contraction seen in 2020. In the coming years, the Government expects private consumption to gradually slow down from a 5% growth rate in 2022 to a still robust advance of 4.5% in 2025.

andrei@romania-insider.com

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