Romania’s retail sales volume index increased by 2.7% y/y in April after a 0.1% y/y contraction in Q1 [revised data from preliminary +0.1% y/y], the statistics office reported.

Stronger sales were supported by an 8.5% rise in sales of non-food items, most likely in-advance spending before the Labour Day and the Orthodox Easter holidays. Public wages were paid in advance at the end of April, the finance ministry said when commenting on the budget execution data. This also explains the rise in sales.

Notably, the sales of car fuels decreased by 2.5% y/y in April after a significant 3.9% y/y drop in Q1. The pattern reverses a robust 6.2% y/y expansion of fuel sales in 2012. Lower sales of car fuels have weakened the performance of retail sales this year. Aggregate food and non-food sales maintained a positive annual dynamic in Q1 and increased robustly in April.

Retail sales have gradually recovered after the massive plunge in mid-2010 and the seasonally-adjusted index is slightly above the level before the introduction of the fiscal austerity package of July 2010. The non-food retail sales have performed even better - they reached in April the same levels as in 2009, and were only some 10% below the peak levels of 2008, before the recession began.

The potential for further growth is, however, contained by uncertain broad economic growth prospects. The independent projections for the full-year GDP growth were indeed updated from 1-2% toward rather 2% and possibly more. But part of this growth is due to the base effects in agriculture – with no impact on wages.