Retail in April under the influence of caution and dropping purchasing power

Cautious spending by the population, the growing prices of food and fuel influenced by global processes as well as the purchasing-power-dampening tax raises continue to limit the resumption of private consumption. After growing for two consecutive months, the retail turnover once again dropped in April month-on-month (by1.0%; in comparative prices, seasonal factor excluded). This drop was primarily determined by the contracted sales volume of automobile fuel. However, automobile sales accounted for outside retail have grown rapidly and thus total retail turnover posts an increase of 0.9%. 

After a growth in the previous third quarters, a 1.1% year-on-year drop in sales was registered in April. That was expected: in the spring of last year retail posted a very rapid improvement. Currently an end has come to the period where, monthly fluctuations notwithstanding, annual increase was guaranteed because of the low base or point of reference. Again: if automobile sales is added to the retail turnover, a significant annual growth has been retained overall (8.4%), owing to a very rapid rise in automobile sales at the end of last year and the beginning of this year. 

The May confidence indicators show an improvement in almost all positions – the population confidence indicator has risen 3.5 points and merchant confidence indicator 1.0 points month-on-month. Looking back on the fluctuating, unconvincing dynamics of recent months, however, we have to realize that the "pluses" are rather a compensation for previous "minuses" and should not be construed as a sign of imminent improvement in the commerce sector. 

The effect of the latest political development on trade seems neutral. On the one hand, uncertainty is on the rise and that could prompt even more caution in population's spending. On the other hand, they could make a positive contribution to improve consumer confidence as was the case in the pre-election period.

APA: Rutkovska, A. (2022, 27. may.). Retail in April under the influence of caution and dropping purchasing power. Taken from https://www.macroeconomics.lv/node/2332
MLA: Rutkovska, Agnese. "Retail in April under the influence of caution and dropping purchasing power" www.macroeconomics.lv. Tīmeklis. 27.05.2022. <https://www.macroeconomics.lv/node/2332>.

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