Romania – Annual pace of retail sales down to 1.1% in Feb | NEUTRAL

• According to the figures released by the National Institute of Statistics (NIS) this morning, retail sales (a proxy for private consumption, the main component of the GDP, from the demand side perspective) contracted by 1.0% M/M in Feb.
• All main components declined, being noticed the decrease of the sales of food goods/beverage/tobacco by 1.9% M/M.
• At the same time, the sales of fuels and the sales of non-food goods diminished by 0.6% M/M, and 0.1% M/M, respectively.
• The Y/Y pace of the retail sales decelerated from 4.5% in Jan to 1.1% in Feb, the weakest level since Dec 2023.
• One can notice the contraction of the sales of food goods/beverage/tobacco for the third month in a row in Feb, by an intensifying Y/Y pace to 4.0%, the most severe decline since Apr 2020 (the moment of the outbreak of the coronavirus pandemic).
• The sales of non-food goods decelerated from 7.3% in Jan to 4.3% in Feb, the slowest since Dec 2023.
• Last, but not least, the sales of fuels grew by only 3.3% Y/Y in Feb, the weakest performance since Nov 2024.
• Therefore, during Jan-Feb 2024 the retail sales rose by 2.8% Y/Y on average, as the strong increase of the real wages in the past quarters (reflected in the right-hand chart) was counterbalanced by the intensifying risk perception, with impact for the savings rate.
• On the one hand, the sales of fuels and the sales of non-food goods rose by 5.7% Y/Y, and 5.8% Y/Y, respectively.
• On the other hand, the sales of food goods/beverage/tobacco contracted by 2.3% Y/Y in Jan-Feb 2025.
• Our view: the slowing-down of the annual pace of the retail sales in Feb was convergent to our current core macroeconomic scenario, according to which the private consumption (the main component of the GDP) would decelerate from 5.9% Y/Y in 2024 to 2.3% Y/Y in 2025. This scenario is supported by several factors, including the fiscal consolidation, and the persistence of risk perception at high levels, with impact for the savings rate (in 2024 already at the highest level since 2020), the investment climate, and consequences for the labour market. Furthermore, we point out that this scenario would be updated this month, by incorporating the most recent macro-financial developments (foreign and domestic), including the recent decisions in terms of trade policy in US | NEUTRAL