Lithuanian retail sales grew at an unadjusted 2.9% y/y in July in constant prices, Statistics Lithuania reported on August 28.

The reading shows retail sales grew at a slower pace than the 3.4% annual expansion seen the previous month. Still, shop turnover has been on an uninterrupted growth track since the start of 2015, falling below 3% only twice.

Sales grew 3.2% on the year on a working-day adjusted basis in June, faster than the 2.6% expansion in June. Month to month, sales inched up an adjusted 0.4% and 2.3% in unadjusted terms in July.

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 annual growth in shop turnover in June appears due to a fall in food, alcohol, and tobacco sales, as they contracted 0.2% y/y on an unadjusted basis. Sales of non-food products expanded 3.8% y/y in unadjusted terms, while sales of automotive fuels grew 6.8% on the year. In nominal terms, sales came in at €885.6mn at current prices in June.