Latvian retail sales grew a calendar adjusted 1.3% y/y in July, picking up somewhat over weak expansion of 0.9% in June, data from the Central Statistical Bureau (CSB) showed on August 30.
Despite improving, growth remains feeble compared with last year's surge and regional data. Still, July was the eighth month in a row in which sales expanded. Therefore the trend offers hope that consumption can remain a major driver of economic growth this year; GDP increased at a disappointing 0.7% y/y in adjusted terms in the second quarter.
This year is yet to see retail sales growth match the pace of 4% or more seen through the bulk of 2015. That said, the higher base is clearly playing a role. In monthly terms, sales increased a seasonally adjusted 0.4% in July.
The annual growth was driven by a 12.2% expansion in sales of clothing, as well as automotive fuels, sales of which grew 11.5%. Overall, sales of non-food products increased 4.6%, while food sales fell 3.9%.
As real incomes are set to keep growing, and inflation to remain very low, retail sales should in theory retain growth through the year. That said, the average gross monthly wage in Latvia grew only 3.3% y/y in the second quarter, according to data from the CSB published on May 30. In January-March, wages expanded 5.3%.