Retail sales volume in Romania increased by 4.1% y/y in January, half the 8.6% y/y advance in 2024 and the 9.2% y/y in Q4 2024, according to data published by the statistics office INS. In seasonally and workday-adjusted terms, the retail sales inched up by 0.1% m/m.

The slowdown was visible in both food and non-food segments of the market, while the fuel sales increased by 7.6% y/y (+0.5% m/m).

Food sales posted a negative annual growth rate (-0.9% y/y) in January for the second consecutive month while the non-food sales weakened to +7.0% y/y in January from +15.8% y/y in December.

The analysts of Erste Group, in a research note, said they expect a deceleration in retail sales growth to +4.5% in 2025 from +8.6% in 2024. The growth rate looks still solid, compared to the plunge predicted by the state forecasting body CNP for real wages: +1.6% in 2025 from +8,6% in 2024. 

The lower advance in the households' wage incomes might be offset by the lower loan interest rates, thus more affordable consumer loans. It will eventually all depend on consumer confidence, which is highly unpredictable due to the high economic and political volatility.

Romania's retail sales rose by +5.1% per annum over the past five years (2024 compared to 2019). Therefore, the 4.5% y/y performance predicted by BCR Research 2025 would translate into a moderate slowdown.

The risk balance is skewed to the downside due to ongoing fiscal consolidation and political uncertainty in the first half of the year, the analysts of the Austrian financial group say. 

Households' savings buffers should partially cushion the effects of tighter fiscal and income policies according to their forecast.

Consumer and retailers' confidence improved in February, hinting at possible improvement of the market in the second month of the year.

Consumer confidence increased to -17.0 in February from -20.3 in January. Nevertheless, households are more likely to remain prone to saving, given the still high uncertainty.

Retail trade confidence rose to 8.5 in February from 8.0 in the previous month. Stronger business expectations by managers offset weaker past activity and higher inventories.

iulian@romania-insider.com

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