Retail sales fell by 1.3% M/M in December, according to data from the National Institute of Statistics (NIS), reflecting weaker demand for food, beverages, and tobacco (-2.0% M/M) and non-food goods (-0.9% M/M). However, fuel sales rose for the second consecutive month, increasing by 1.7% M/M.
On a Y/Y basis, retail sales growth slowed for the second month in a row, reaching 7.8%—the weakest pace since May 2024—amid heightened risk perception due to political tensions. Notably, food, beverage, and tobacco sales contracted by 0.3% Y/Y for the first time since March 2024. In contrast, non-food sales remained robust, advancing by 15.9% Y/Y, while fuel sales rose by 5.2% Y/Y.
For the full year 2024, retail sales increased by an average of 8.6% Y/Y, with non-food sales rising 14.8% Y/Y, supported by favourable labour and credit market conditions. Food, beverage, and tobacco sales grew by 3.8% Y/Y, while fuel sales advanced by 3.6% Y/Y.
Our view: We expect retail sales growth to continue slowing in 2025, reflecting fiscal consolidation measures, including the freeze on public wages and pensions, alongside rising real interest rates. Private consumption growth is projected to decelerate from 6.1% in 2024 to 2.5% in 2025, before recovering to 3.0% in 2026 and 3.4% in 2027 | NEUTRAL.
