June trade data enjoyable, but more moderate growth to be expected
The retail turnover in June grew 2.1% month-on-month and 8.4% year-on-year. Since seasonal factors are excluded from the calculations, the annual demand for Jāņi cheese and beer has had no significant effect. It is obvious that the reduced VAT rate as of 1 July also has been of no particular consequence even though it may have stimulated postponing purchases to July. Thus short-term factors this time have played no important role and we can talk of general growth both in the food- and non-foodstuff item segments.
Looking at both consumer and merchant evaluations, there was ground to expect good trade result: the consumer confidence indicator in June had improved by 7.6 points and retail trade confidence indicator by 6.3 points. Within the limits of one month, such growth is quite impressive.
Along with the June data, we can also evaluate the results for the second quarter. Despite the fact that the drop in retail trade turnover in April was followed by two periods of growth, there has been a small drop in sales volumes quarter-on-quarter (‑0.2%). A high growth rate has nevertheless been retained year-on-year: 7.9%. It is likely, however, that this could be the last period of such rapid growth, with future growth moderating because of the high base.
The July survey data published by the European Commission today indicate a worsening in the Latvian consumer and business confidence – by 2.1 points and 4.9 points respectively. That is hardly a surprise, given the substantial improvement in the previous month. Despite the deterioration, Latvia still finds itself in an area of certain optimism along with our main trading partners – Estonia, Sweden, Germany and Lithuania – especially given the grim tidings elsewhere in Europe. This is the main reason why we can still talk about a rather positive Latvian export dynamic and hope for good results domestically, including trade.