Retail sales still at crossroads: actual data and future expectations paint a different picture
The retail turnover data for October 2012 were expected to sketch an approximate dynamics of private consumption (the main GDP component) for the fourth quarter of 2012. Yet this sketch is far from clear. The dynamics of month-on-month and year-on-year retail growth rates point to different conclusions and, similar to previous months, it is too early to confirm a substantial change in trend over the middle term.
On the one hand, the retail turnover (at constant prices, seasonality excluded), has dropped by 1.4%. Thus, for the first time since the end of 2010, a drop has been observed for two consecutive months.
On the other hand, the rate of annual growth (at constant prices) has remained robust at 9.2% (in the third quarter it was 9.5%), particularly affected by the rise in retail sales of the non-food products (12.7%; compared to 1.4% in the food products group).
Moreover, the European Commission’s confidence data for November once again confirmed that confidence among both businesses and consumers in Latvia overall continues to be the highest among the European Union countries. The value of the Economic Sentiment Index (ESI) has held stabilizing over recent months at the level of early 2008. Regarding the retail trade confidence, it has remained positive since April 2010. Furthermore, in November of this year the average outlook among consumers regarding the overall economic situation in the country for the next twelve months turned optimistic for the first time since August 2007.
Albeit retail turnover annual growth rate will continue to drop in the medium term, unexpectedly big monthly minuses at the end of this year are not expected.