Residents have started to spend more and are slowing down on saving, several bank economists told LETA.
Bank of Latvia economist Daina Paula told LETA that retail trade turnover in the third quarter increased by 1.9 percent at constant prices compared to the second quarter.
Over a longer period, food retail trade has been growing more modestly than sales of non-food products. This may be due to various factors, such as the expansion of food sales outside traditional grocery stores and supermarkets (for example, in certain household or home improvement stores) or the growing popularity of ordering ready-made meals.
In the non-food segment, by contrast, an upward trend in turnover dynamics can be observed, which could be linked, for example, to the growing number of mortgages. “It is very likely that the incentive to spend rather than continue to increase savings is influenced by negative real deposit rates. The hosting of the EuroBasket tournament may also have contributed to the third quarter’s retail boom, but it is difficult to separate its impact from other factors,” said Paula.
According to the economist, data on payments with cards issued in Latvia show that consumers are slowly but increasingly using their cards for online shopping abroad, which means that the Latvian retail sector is facing stronger competition. Some structural changes in retail may also be gradually emerging due to changing consumer habits – for example, the increasing use of electric vehicles. The government’s support program for purchasing zero- and low-emission vehicles is concentrated mainly in Riga and the surrounding region.
SEB Banka macroeconomics expert Dainis Gašpuitis told LETA that retail turnover rose by 2.6 percent in September. Retail sales of food products fell by 0.4 percent, while sales of non-food goods (excluding motor fuels) increased by 5.5 percent, and fuel sales grew by 0.8 percent.
Compared to September 2024, the largest increases were recorded by retailers of cultural and recreational goods (up 12.3 percent), household electrical goods (up 10.7 percent), and pharmaceutical and medical goods (up 9.6 percent).
Gašpuitis explained that the slight decline in food product sales indicates that the lowest point in this segment may soon be reached.
“Despite general uncertainty, the outlook for consumption has become somewhat more optimistic. Consumption growth continues to be supported by strong real wage growth and improving employment levels, which should continue to strengthen consumer sentiment,” the economist said.
He added that the pace of savings growth has stabilized in recent months, indicating that people are saving less and spending more actively, including when deciding to buy a new home.
A gradual recovery in retail sales in the third quarter was also observed elsewhere in Europe – Lithuania’s retail sales grew by 4.1 percent in September, and Estonia’s by 3.7 percent.
Source: BNS
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