In February, real (without price influence) retail trade volumes for 3 months. moving average growth in Lithuania accelerated to 3,1 percent. and was the fastest in almost 22 months. Volumes of retail trade of non-food products in 3 months. the moving average growth in Lithuania reached 4,2 percent in February, while IT, culture, recreation and other non-necessary goods retail turnover growth accelerated to 12,4 percent in February. and was the fastest in 23 months.
The growth of the latter category shows that Lithuanian consumers are more and more boldly spending money on large and more expensive, non-essential purchases, which implies the strengthening of domestic demand in Lithuania.
The recovery of the population’s purchasing power has a significant influence on such a high level of Lithuanian consumer confidence and the acceleration of retail trade. In March, the annual inflation in Lithuania slowed down to 0,3 percent, and the average wage continues to grow. Citadele bank economists predict that this year the average annual inflation in Lithuania will reach 1,7 percent, and the average salary will increase by 7 percent.
What do consumer expectations look like in other Baltic countries?
Consumer optimism in Latvia and Estonia is lower than in Lithuania, but with a touch of positivity. Latvija in terms of general consumer optimism in March, it was 15th in the whole EU, and Estonia was second to last, ahead of only Greece.
In Estonia, consumer optimism is currently around 50 percent. smaller than Covid-19 at the peak of the pandemic and about a fifth worse than at the peak of the global financial crisis. Great impact on the low optimism of Estonian consumers, especially compared to Latvia and Lietuva, has a relatively higher level of indebtedness among Estonian consumers. Eurostat data shows that Estonian household debt amounts to 36,8 percent. GDP, while in Lithuania and Latvia – 21,8 and 17,7 percent, respectively. This means that Estonian consumers reacted relatively more sensitively to the increase in the base interest rates in the euro area – due to the higher level of indebtedness.
On the other hand, in Estonia it is already possible to see the first positive changes in the indicators of consumer optimism – in March, the expectations of Estonian consumers were one-fifth better than in 2022. in September, when Estonian consumer optimism reached a critically low level. Consumers’ intentions to spend money on large purchases in Estonia stabilized, and intentions to spend money on large purchases 12-ai months ahead has already reached the long-term average. At that time, the intentions of households in Latvia to spend money on large purchases already exceeded the long-term average in March and reached the highest level in 23 months.
Lithuanian consumers show an impressive level of optimism compared to other EU countries, which is greatly influenced by the recovering purchasing power of the population, which is also reflected in the retail trade statistics. Latvia and Estonia lag behind Lithuania in terms of the level of consumer optimism, but the light at the end of the tunnel can also be seen in the other states of the Baltic region.
