Sluggish 1.8% year-on-year increase in Romania's retail sales during the second quarter
Romania's retail sales volume growth decelerated to 1.8% year-on-year in Q2 2025, marking a significant slowdown from the 8.6% growth recorded in 2024. This decline is primarily attributed to persistently high inflation and stagnant wages, especially in the public sector where real wage growth is expected to turn negative after a strong increase in 2024.
Additional factors contributing to the slowdown include the anticipation of fiscal and budgetary reforms expected to weigh on household consumption in the coming months, moderating retail spending growth. Despite this slowdown, retail sales saw a slight 0.2% quarter-on-quarter increase in seasonally adjusted terms in Q2, maintaining the same mild pace as in Q1.
A notable temporary surge in sales was expected in July 2025 due to consumers buying ahead of an August 1 VAT rate increase. For the rest of 2025, Erste Research forecasts a 2.3% rise in Romania’s retail sales volume, reflecting continued moderation driven by economic pressures such as inflation and wage stagnation.
Factors Affecting the Slowdown
High Inflation
The Consumer Price Index (CPI) rose to an all-time high in July 2025, reflecting persistent inflationary pressures.
Stagnant/Falling Real Wages
Public sector real wages are expected to decline after 12.5% growth in 2024, while overall real wages are projected to be flat in 2025. This stagnation is likely to further constrain consumer purchasing power and retail sales growth.
Fiscal and Budgetary Reforms
These reforms are expected to dampen household consumption, adding to the slowdown in retail sales growth.
Temporary July Sales Spike
The surge in sales in July was expected due to consumers buying ahead of an August 1 VAT rate increase.
The overall expectation for 2025 retail sales volume is a modest growth of around 2.3%, down from much higher growth rates in previous years due to these economic headwinds.
Retail sales monthly data showed 1.1% month-on-month growth in June, surpassing some expectations, but annual growth at 2.5% was the weakest in 18 months, reinforcing the slowdown trend. The retail sales volume index increased by 1.8% y/y in Q2 of the year, while the retail sales increased by +2.5% y/y in June, the slowest annual pace in one and a half years. In seasonally-adjusted terms, the sales volume inched up by 0.2% q/q in Q2.
It's worth noting that over the past several years, the volume of retail sales has been less sensitive to households' rising revenues. This suggests that other factors, such as inflation and fiscal policies, may have a more significant impact on retail sales growth.
[1] Erste Research Report, Retail Sales in Romania: Q2 2025 Update [2] National Institute of Statistics, Romania Retail Sales Volume Data, Q2 2025 [3] National Bank of Romania, Consumer Price Index Data, July 2025 [4] Erste Research Report, Romania Retail Sales Monthly Data: June 2025 Update
- The anticipated fiscal and budgetary reforms, along with the high inflation and stagnant/falling real wages, are major business and finance issues contributing to the slowdown in Romania's retail sales growth in 2025.
- Despite a temporary surge in sales in July 2025 due to consumers buying ahead of an August 1 VAT rate increase, the overall retail sales volume growth in Romania is forecasted to be around 2.3%, showing a significant decline from previous years due to economic pressures such as inflation, wage stagnation, and the impact of fiscal and budgetary reforms.
