Retail sales accelerated their growth to 7.9% y/y (wda & sa) in June from 5.9% y/y in June (revised from 5.7% y/y), according to figures of the INSSE. Even if growth remained well below the levels reported in February and March, it exceeded the H1 average, mostly on the back of a more significant fuel trade rise acceleration. Nevertheless, consumption of food and non-food also accelerated in spite of a faster CPI rise in the period. The monthly increase was insignificant indicating that a consolidated upwards trend remains uncertain.
As recalled, fuel sales returned to growths in June, probably due to lower prices. Growth notably strengthened in July, pushing up private consumption to an unexpectedly strong rebound. Some milder rise accelerations were recorded in the food and non-food consumption as well. Some boost in wage revenue probably generated those developments, especially in the public sector, where the unitary wage bill provides gradual salary increases by 2022 in various fields. Vacation bonuses granted in July perhaps added too.
Generally, consumption kept on accelerating in June, although expectations point that domestic demand expansion would wear off. Rising incomes seem to cushion the negative effects of inflation acceleration on consumption mood. That is unlikely to be on the back of an upbeat sentiment regarding future income’s developments and more likely due to stronger inflationary expectations, which push up consumption ahead of stronger price hikes, we think. Thus, we doubt that the solid upward trend would continue for long and we still see consumption weakening by end-2019.