Retail trade grows in January, a drop expected in February

2013 has begun with a rise in the retail turnover. The January retail turnover, seasonally adjusted data at constant prices, rose 1.2% month-on-month. The year-on-year rise was at 5.2%, which is a very high rate of growth compared to the performance of other countries, albeit substantially lower month-on-month because of the higher base (the annual growth rate in December reached 8.4%).

Two mutually opposing factors had an important influence on the January trade results:

  1. At the beginning of January, it is Christmas holidays in Russia and that is the time of year when tourists from that country tend to visit Latvia in greater numbers and for longer periods. That certainly has an impact on the turnover in Latvian shops, particularly those selling fashion goods and jewellery as well as household goods. Data, however, do not support traders’ information: textiles even dropped in January by 1.1%; only the sales volumes of furniture and household goods went up. It is possible that tourists have promoted a rise in automobile sales, which indeed posts a rapid rise of 8.4% month-on-month.
  2. In January, inhabitants received heating bills for December that in many cases were higher than before, especially compared to the warm December of the previous year when the consumption of energy was much lower. That in turn had a negative impact on the purchasing power of the population, i.e. their ability to also purchase goods. Given the rather positive confidence indicators of the population and the rise in the sales of foodstuffs in January (by 2.6%), it invites the supposition that the rise in heating related expenditure was compensated by salary raises. Yet the survey results recently published by the European Commission point to a substantial deterioration in the consumer confidence indicator – by 3.6 points, which could be related to the higher heating bills.

The trader confidence likewise points to a deterioration – if in January it rose by 5.1 points, then in February it dropped by 2.5 points. In all likelihood, this deterioration precedes a drop in the data on retail turnover in February - the Russian guests have returned home and we can hardly expect a large rise in the purchasing power of the population. 

APA: Rutkovska, A. (2022, 28. may.). Retail trade grows in January, a drop expected in February. Taken from https://www.macroeconomics.lv/node/2141
MLA: Rutkovska, Agnese. "Retail trade grows in January, a drop expected in February" www.macroeconomics.lv. Tīmeklis. 28.05.2022. <https://www.macroeconomics.lv/node/2141>.

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