The retail sales volume index in Romania increased by only 0.7% y/y in July, the statistics office INS announced. In seasonally-adjusted terms, it contracted (by 0.2% m/m) for the second month in a row (-1.9% m/m in June), showing visible signs of fatigue for the fourth month in a row after at least a decade of sustained growth.

Private consumption, pinpointed by retail sales, constituted one of the main drivers for Romania’s overall long-term economic growth. It is expected to slow down to +3.0% y/y in 2023 (+5.5% y/y in 2022) and slightly pick up the remaining below 5% y/y in the coming years.

The private consumption slowdown is visible in the first seven months of the year when the retail sales index increased by only 2.7% y/y compared to +4.4% y/y in 2022.

The structure of the retail sales dynamics is slightly puzzling but consistent with the wide income discrepancies in Romania. While the non-food retail sales keep growing (no fatigue seen over the past four months and a robust +5.3% y/y growth in July, the food sales contracted by 0.6% y/y in July.

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16 August 2023

Macro

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The seasonally-adjusted indices better illustrate the diverging trends of the non-food (a benchmark for consumer confidence) and food sales (dragged down by low-income households).

iulian@romania-insider.com

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