Czech industry maintains slight growth of 0.2% y/y in June, while construction booms by 14% y/y
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Romania’s retail sales growth decelerated to 1.8% year-on-year in the second quarter of 2025 (chart), down from 3.5% in the first quarter and 8.6% in 2024, according to data published by the National Institute of Statistics (INS) on August 6.
In seasonally adjusted terms, retail sales edged up by 0.2% quarter-on-quarter in Q2, maintaining the pace recorded in Q1. The slowdown follows a sharp expansion in 2024 and comes ahead of fiscal and budgetary reforms expected to weigh on household consumption. A temporary surge in sales is anticipated in July, ahead of the VAT rate increase that came into effect on August 1.
Erste Research forecasts in a research note a 2.3% rise in retail sales volume for the full year 2025. The slowdown is attributed to persistently high inflation and stagnant wages, particularly in the public sector, where real wage growth is expected to turn negative after a 12.5% increase in 2024. For the broader economy, real wage growth is projected to be flat in 2025, following a 7.4% rise last year.
On a monthly basis, retail sales rose by 1.1% in June and by 2.5% year-on-year—the weakest annual rate in 18 months. The result surpassed Erste Research’s forecast of a 0.8% monthly decline and 0.5% annual increase. The financial group explained that its estimate had been based on worsening consumer and business sentiment indicators, which may have overreacted to anticipated fiscal tightening.
Confidence indicators deteriorated markedly in July. The retail trade confidence index fell to -5.5, the lowest level since the end of the first wave of the Covid-19 pandemic. Consumer confidence dropped more sharply, falling to -31.4, the lowest since June 2022 at the outset of the war in Ukraine.
Non-food sales, a key gauge of consumer sentiment, declined by 0.6% q/q in Q2. Annual growth slowed to 4.2%, down from 7.8% in Q1 and 14.8% in 2024. Food sales rebounded by 1.7% q/q after contracting by 2.3% in Q1, though annual volumes remained weak (-0.4% y/y).
Car fuel sales increased by 0.4% q/q and 0.6% y/y in Q2, continuing a volatile trend driven primarily by price fluctuations.
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