Retail Sales Decline in Romania
In the third quarter of the year, retail sales volume in Romania experienced a contraction of 2.3% on a quarterly basis, leading to a 0.3% annual decline. This marks the second negative reading since the onset of the COVID-19 pandemic. The decline was significantly influenced by a drop in real wages, which fell by 3.7% year-on-year in July and August, the latest available data. This follows previous growth rates of +2.2% in the second quarter and +4.6% in the first quarter. Over the last three quarters of 2024, real wages had been increasing at an average rate of 9%-10% annually.
The rise in employment also weakened, with only a 0.1% year-on-year increase in July and August. In previous periods, employment growth had helped stabilize household budgets, with increases of +0.6% in the first half of the year, +0.7% in 2024, and +1.3% in 2023.
With retirees and employees in the public sector facing frozen nominal incomes until the end of 2026, despite rising consumer prices, and private sector workers facing job insecurity due to an economic slowdown, consumer confidence is expected to continue declining.
Sectoral Performance in Retail Sales
Looking at specific categories of goods, food sales saw the most significant decline in Q3, with a year-on-year decrease of 3.1% and a quarterly drop of 2.6%. The government’s budgetary measures implemented in July and August had a regressive impact, particularly affecting low-income households. This trend is typically reflected in reduced food sales.
In contrast, non-food goods saw a modest year-on-year increase of 0.4%, although they declined by 1.8% on a quarterly basis. Car fuels, which are considered separately from non-food sales, showed weak correlation with household incomes, increasing by 3.3% year-on-year in Q3, with a 0.2% quarterly rise.
Monthly Trends in Retail Sales
Monthly data reveals some recovery in retail sales in September, with a 1.3% month-on-month increase after a steeper 4.0% plunge in August. This decline in August was attributed to a VAT rate hike, while July saw a 0.7% monthly decrease following an increase in electricity prices.
FMCG Sales and Consumer Behavior
The official Q3 data from the statistics office aligns with recent findings from NielsenIQ on fast-moving consumer goods (FMCG) sales, which show a 1.1% year-on-year increase in Q3. However, this represents a slowdown compared to the 3.6% growth in Q2 and 5.0% in Q1. According to the consulting company, this reflects actual purchases in stores, where consumers have shifted towards budget brands to cope with rising prices and uncertain income expectations.
The statistics office data, however, does not capture these behavioral changes. For instance, the average FMCG prices reported by NielsenIQ increased by only 3.5% year-on-year in Q3, whereas food goods saw a 7.9% annual rise, and non-food goods, including electricity and other non-FMCG items, experienced an 11.1% surge.