Romania’s seasonal and workday adjusted retail sales index edged up marginally (+0.1% m/m) in July and remains at historically high levels.
From a broader perspective, consumption has already returned to pre-crisis growth rates and (in absolute terms) is not far from where it would have been in the absence of the COVID-19 crisis (assuming a steady growth rate).
The retail sales’ rally during the first part of the year (+4.1% ytd, seasonally adjusted terms) was driven by hopes for and consumer confidence in no more COVID waves.
However, 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% y/y as of July, while being 13.0% above the level as of July 2019, consistent with a 6.3% annualised growth.
The recovery was nearly full in the non-food segment — up 9.4% y/y as of July and +10.2% annualised over the past 24 months.
In the food sector, sales increased by 6.8% y/y 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% y/y 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.