Retail sales in Romania remain stationary for the ninth successive month in May.
In a recent development, Romania's retail sales have shown a deceleration in May 2025, as several factors have contributed to the slowdown.
## Factors Contributing to Deceleration in May 2025
1. **Moderation in Automotive Fuels Sales**: Sales growth for automotive fuels decreased from 1.8% in April to 1.2% in May, contributing to the overall slowdown in retail sales.
2. **Decline in Food, Beverages, and Tobacco Sales**: There was a decline in sales for food, beverages, and tobacco, which fell by 1.0% compared to a 0.3% drop in the previous month.
3. **Monthly Retail Trade Decline**: Retail trade fell by 0.1% in May, following a 0.6% drop in the preceding period, indicating a persistent monthly decline.
4. **Comparison with EU Trends**: While retail sales in the EU experienced a more significant drop, Romania's annual growth rate was lower in May 2025 compared to previous months. This could reflect broader economic trends impacting consumer spending.
## Impact Expected in June and Beyond
- **Economic Constraints**: The ongoing economic pressures, including high prices and potential fiscal measures, could continue to affect consumer spending, potentially leading to slower growth in retail sales.
- **eCommerce Dynamics**: The Romanian eCommerce sector is focusing on efficiency and higher average order values, which might stabilise online sales but could face challenges from global competitors and new fiscal measures.
- **Long-term Retail Trends**: The shift towards operational efficiency and customer retention in eCommerce could influence broader retail strategies, potentially stabilising sales but at a slower growth rate.
Overall, while retail sales in Romania have shown some resilience, the combination of economic uncertainty and competitive pressures from global eCommerce platforms could continue to impact retail performance in the coming months. The government's planned measures, such as a higher VAT rate and excise duties starting August 2025, could further affect purchasing power, adding to the challenges faced by retailers. Moreover, the political turmoil and the absence of public wage and pension hikes for 2026 may contribute to households maintaining a more cautious spending position.
Despite these challenges, it is essential to note that sales of non-food goods increased by 3.4% y/y for the two-month period, suggesting that consumers are still making discretionary purchases. The retail sector's response to these challenges will be crucial in determining its future performance.
In light of the current economic pressures, the finance sector might be significantly impacted by Romania's retail market slowdown, as the ongoing fiscal measures and high prices could affect consumer spending and purchasing power. Consequently, this deceleration in retail sales could potentially have a ripple effect on various business sectors, including automotive fuels and eCommerce, where efficiency and customer retention have become crucial strategies.
