Estonian retail sales suffer contraction in November

Estonian retail sales suffer contraction in November
By bne IntelliNews January 7, 2018

Estonian retail sales fell 1% y/y in constant prices in November, according to data released by Statistics Estonia on January 2. The fall is the first since June 2013.

The reading shows the sector’s performance falter as rising prices of automotive fuels hit sales, which dropped 9% y/y, Statistics Estonia noted. Petrol and diesel fuel were 16% more expensive in annual terms in November.

In monthly terms, retail sales fell 4% overall, compared to a contraction of 4% m/m in October.

The fall in November comes in contrast to the good economic environment in the Baltic state that favours consumption. Wages grew 7.4% y/y in the third quarter on the back of a tightening labour market. However, the growth in wages is offset to an extent by rising inflation, Tonu Mertsina, chief economist at Swedbank’s Estonian branch, told IntelliNews.

“Retail sales slowed despite the improved consumer confidence. One reason is the deceleration of real growth of net wages, as nominal wage growth remained strong, but the acceleration of inflation slowed it in real terms,” Mertsina said.

The data on industrial production, which came out on January 4, also showed output dynamics slowing down. That could potentially translate into slower GDP growth in the fourth quarter.

GDP expanded 4.2% y/y in the third quarter. The Estonian economy is expected to grow 4.2% in 2017, according to the most recent prediction by Swedbank. The outlook from the European Commission puts growth at 4.4%.

Apart from the annual fall in sales of automotive fuels, the decrease in headline retail sales also came on the back of a 3% y/y fall in sales in grocery stores. That also was caused by growing prices, the stats office said.

Elsewhere, there was a 5% expansion in sales of manufactured goods, compared to a growth of 8% y/y in October. Within the segment, turnover increased the most in stores selling via mail order or the internet, where sales jumped 28% y/y. Stores selling household goods and appliances, hardware and building materials saw sales grow 12% y/y, while textiles, clothing and footwear sales grew 8% on the year.

Data

Dismiss