Estonian retail sales growth reflects improvement in consumer confidence - analysts

Photo: Mihkel Maripuu

The growth in Estonian retail sales indicates a rise in consumer confidence and the weaker sales results at the beginning of the year might rather have been caused by the cold spring and high heating expenses, analysts believe.

The 7 percent increase in retail sales last month was the highest since September 2012, Swedbank analyst Tonu Mertsina observed.

Consumer confidence in general and in regard to personal financial situation has improved since last December, with a significant improvement recorded in March, Mertsina pointed out. "With the end of the heating period also the impact of higher electricity prices will decrease which ought to leave consumers room for other outlays," he said.

Slowdown of inflation together with the acceleration of real wage rise will also have a positive effect on consumption growth, he added.

SEB Pank analyst Ruta Arumae told BNS that retail trade returned to the growth trajectory anticipated by the bank. "Growth was slower in January and February due to last year's unusually high growth figures, but in March the reference base normalized," she said.

Annual growth in sales of retail trade enterprises will remain at the level of approximately 2 percent influenced by the rise in the reference base in coming months, chief analyst of Nordea Pank Tonu Palm predicted.

"Confidence indicators of the retail trade and consumers have been swimming in opposite directions this year," Palm said. "While entrepreneurs are more cautious about the business environment consumers have defied risks as well as the higher electricity prices."

Retail sales of goods by retail trade enterprises grew 7 percent at constant prices in March compared to the same month of the previous year, Statistics Estonia said on Tuesday. In January retail sales increased by 4 percent and in February by 2 percent year on year. The annual growth accelerated somewhat in March.