RO: Consumers cut back on spending

Retail sales dropped -1.0% m/m and lost speed to +3.3% y/y in February vs +4.1% in January. The data for January was revised upwards by the National Institute of Statistics.

We think that retail sales growth will decelerate to +2.3% in 2025 from +8.6% in 2024. Private consumption is pressured by fiscal consolidation, a slowdown in real wage growth, and political uncertainty during the first half of the year. Households savings buffers should partially mitigate these risks.

Food sales dropped -1.9% m/m and -0.4% y/y, turnover for non-food items was roughly flat on the month at -0.1% m/m and were up +5.9% y/y, while sales of car fuel were weak at -0.6% m/m and +0.3% y/y.



Consumer confidence marginally decreased in March due to a more negative view of households about past financial situation, as well as their future economic situation. However, consumers expect a significant improvement in their financial situation compared to last month.

Retail trade confidence rose in March driven by stronger reported past activity and lower inventories. Business expectations for the future have decreased from the last month.

Online sales, consisting mainly of non-food items, lost speed in recent months in a sign that consumers are becoming more prudent.

Consumer loans origination is strong, helped by loose credit standards and a drop in interest rates of almost 2pp for new loans in the past year due to ample liquidity surplus in the banking system.