Turkey's calendar-adjusted retail sales volume index rose by 1.2% y/y in May after posting annual declines for seven consecutive months from October to April, national statistics office TUIK reported on July 11.

February's 4.4% annual contraction in retail sales was the highest posted since 2010, when the compilation of the retail trade data began. The March and April figures therefore marked a substantial deceleration in the descent of the index. Annual retail sales growth slowed to 0.7% in 2016, the lowest annual rise ever.

Among sub-items, household appliances and furniture sales continued to post annual declines for the ninth consecutive month since September, measured at 0.8% y/y in May despite the tax cuts extensions. Food and beverages sales also posted an annual decline of 3.6% in May, the fourth consecutive annual contraction.

Clothing sales posted the highest annual rise of 12.3% in May while overall non-food sales except automotive fuel rose 3.6% y/y. Automotive fuel sales rose by 1.6% y/y in the month.

Turkey's consumer confidence index deteriorated by 3.8% m/m to the level of 70 in June, the lowest figure recorded since March’s 67.8.

The TUIK survey for June underscored consumers’ pessimistic views on all sub-items measuring sentiment in regard to the general economic situation, the financial situation of households, the job market for the next 12 months and the probability of saving.

Meanwhile, retail confidence in June deteriorated on a monthly basis following a two-month long path of improvement over the previous two months. The seasonally-adjusted retail confidence index declined 2.1% m/m to 100.7.

Turkish retailers have been recorded as optimistic in the last three months despite the deterioration in June.

The strong loss in momentum that the Turkish economy experienced during 2016 is expected to reverse only gradually as uncertainty recedes during the year, the European Commission said last week. Supported firstly by net trade, momentum is set to improve towards the end of the year as domestic demand benefits from improvements in monetary conditions and confidence, according to the EC.

The OECD is forecasting that private final consumption growth in Turkey will decline to 3% in 2017 from 4.1% in 2016.