Retail sales (which correspond quite closely to private consumption – the main component of GDP) grew in May at less than half the rate of inflation. Sales rose by 3.3%, while inflation eased to just over 10%. When inflation rises, people buy less, and when prices are lower, private consumption rises.

Rapidly rising prices continued to dampen demand, even though there were sectors that saw much stronger growth.

The volume of retail trade in the first 5 months increased by a total of 3.3%, thanks to the growth of sales of food products, beverages and tobacco (+5.1%) and sales of non-food products (+4.0%). Retail sales of motor vehicle fuel in specialized stores decreased by 1.0%, Statistics reported on Thursday.

If we take a closer look, we see a significant increase in sales of clothing (it was also the Easter period and some updated their wardrobes), furniture and accessories, and a significant increase in e-commerce sales.

The economy in 2022 was supported by population consumption, which grew by 5.3%, even in the unfavorable conditions created by accelerated price growth, according to the Annual Report of the BNR. The impact of this price increase was balanced by government measures to protect consumers, the population’s orientation to the strategy of decline (orientation to products with a lower price) or shopping in discounters.

Shoppers spent more in stores, but bought less in volume, which was also evident in April (when Easter was a holiday that is usually accompanied by a steady increase in spending).

BCR’s analysis shows that retail sales are recovering from a surprisingly weak reading in April, with growth driven mainly by sales of fuel and non-food items, which rebounded strongly after falling last month.

The analysis predicts retail sales growth will halve from 2022, a 2% advance this year (from 4.4%), while inflation and high interest rates will weigh on consumer demand, the paper also said.