Romania’s retail sales volume index returned in August to the record level reached in June after its annual growth rate remained above 8% y/y for the third consecutive month, according to data published by the statistics office INS.

The country’s retail sales rose by 6.4% in Q1 and 9.6% y/y in Q2, gaining momentum after a sluggish performance in 2022 and particularly in 2023 when the inflation eroded households’ real purchasing power. 

The 8.1% y/y advance in July-August sets the ground for robust growth in private consumption in the third quarter of the year as well.

But the VAT rate hike expected by some analysts for 2025, as well as a more moderate rise in nominal wages after the end of this year and lower consumer confidence dragged down by slower economic growth, are likely to result in less buoyant private consumption in the medium term.

Until then, fast-paced real wages (+8.9% y/y in July – the fastest annual growth since 2019) and abundant retail lending spurred by lower interest rates and lower inflationary expectations are the main drivers behind the robust private consumption in Romania.

The retail sales index increased by 8.1% y/y in August, driven by the outstanding 16.9% y/y advance of the largely discretionary non-food purchases.  

Sales of food goods rose by only 4.4% y/y while the sales of car fuels contracted by 2.5% y/y in the month.

iulian@romania-insider.com

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