Lithuanian retail sales grew at an unadjusted 2.7% y/y in August in constant prices, Statistics Lithuania reported on September 27.
The reading shows retail sales growth's continued slowdown in a third straight month. The previous month saw sales growth at 2.9% y/y. Still, shop turnover has been on an uninterrupted growth track since the start of 2015, falling below 3% only four times, including July and August.
Sales grew 2.6% on the year on a working-day adjusted basis in August, slower than the 3.2% expansion in July. Month to month, sales inched up an adjusted 0.7% and grew 3.6% in unadjusted terms in August.
As has been the case for months, an improving labour market and growing income are driving retail turnover. Similarly to other CEE economies, consumption is a major plank in maintaining economic growth in Lithuania. With industry and investment now perking up, consumption's persistence may, however, offer extra momentum to put the economy on a stronger path this year.
Lithuanian GDP is expected to grow 2.9% in 2017 overall – although Fitch has put the figure at as much as 3.3% in its recent rating update - with the expansion aided by the return of investment projects co-financed by the EU. The rebound in investment is set to compensate for a likely slowdown in consumption growth, according to the European Commission.
Economic expansion came in at 2.2% in 2016, but growth picked up speed to an adjusted 4.1% y/y in the first quarter and 3.9% y/y in April-June.
The slower headline annual growth in shop turnover in August appears due to a mediocre expansion in food, alcohol, and tobacco sales, which grew just 0.3% y/y on an unadjusted basis. Sales of non-food items expanded 3.2% y/y, while sales of automotive fuels grew 5.6% on the year – the unadjusted growth in both categories was slower than in the previous month. In nominal terms, sales came in at €915.7mn at current prices in August.