Romania’s retail sales make visible comeback in October-November as inflation eases

The seasonally-adjusted retail sales index in Romania increased by 1.7% in November, after the 1.4% advance in October, marking a visible comeback and reversing the 2.7% contraction accumulated over the previous four months, data published by the statistics office INS show.

In annual terms, the retail sales index increased by 3.7% y/y in November, when it reached the highest level since March.

The robust increase in real wages amid lower inflation consolidating consumer confidence and the government’s steps to cap the prices of essential food goods were the two main drivers behind the improvement in sales figures.

Trend data show, however, a gradually slower advance of the retail sales on a medium-term perspective: +2.3% y/y in 12 months to November, from +2.4% y/y calculated in October and +4.4% y/y calculated in November 2022.

Both the seasonally adjusted and gross data reveal the outstanding increase of non-food sales in October-November last year, backed by positive dynamics of food sales as well.

Specifically, the non-food sales advanced by 5.3% in seasonally-adjusted terms to reach a new maximum, while the annual advance of the non-food sales accelerated to +7.3% y/y in November from +4.8% y/y in October and +0.8% y/y in September. This bodes well for consumer confidence and may be explained by the robust increase in incomes, particularly for above-average earners. Real wages increased by over 5% y/y in August-September and by 8.3% y/y in October.

The food sales advanced by only 1.3% (seasonally adjusted terms) in October-November, but this was enough to improve the annual advance to +4.2% y/y in November from +4.0% y/y in October and +3.0% y/y on September.

Despite positive dynamics in October-November (+1.5%), the sales of fuels dwindled around values lower compared to those seen in 2022 (-4.7% y/y in November), and this is probably not because of consumers’ concerns about global heating. The causes of lower car fuel consumption (by households) remain unclear, as the consumption remains at the level of 2019 while the non-food goods sales surged by one-third meanwhile. Working from home and a shift towards air travel may explain part of the gap.

The number of passenger cars in Romania increased by some 25% in 2023 compared to 2019 (and yet the fuel consumption hasn’t advanced).

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