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Continuation of the Record Streak: Retail Consumption Increased for the 43rd Consecutive Month

In Croatia, retail consumption increased by 2.1 percent year-on-year in March, marking the 43rd consecutive month of growth, and it was faster than the previous month. The Croatian Bureau of Statistics (DZS) published a report on retail trade on Monday, and according to seasonally adjusted data, consumption in March rose by 2.5 percent compared to the previous month, while it increased by 2.1 percent compared to March of last year.

This is a faster growth than a month earlier, when consumption rose by 1.2 percent year-on-year, but somewhat slower than expected. Three macroeconomists who participated in a Hina survey expected an average consumption growth of 2.3 percent year-on-year in March, with their growth estimates ranging widely from 0.5 to 3.8 percent.

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Thus, in March, the record positive trend continued, given that the last year-on-year decline in consumption was recorded in August 2014. The growth of consumption for 43 consecutive months has not been recorded since DZS began tracking these data. In March, the year-on-year turnover from retail trade in food, beverages, and tobacco products increased by 3.8 percent, while retail sales of non-food products strengthened by 2.8 percent.

“The acceleration of growth in March was supported by stronger growth rates in the categories of non-specialized stores predominantly selling food, by 13.1 percent, other non-specialized stores, by 18.2 percent, as well as growth in specialized stores selling food and textiles, clothing, footwear, and leather products. Stronger growth was limited by declines in other categories of retail trade,” analysts from Raiffeisenbank Austria (RBA) noted in their commentary on the DZS report. In the first three months of this year, retail trade turnover increased by 3.1 percent compared to the same period last year.

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“This represents a slight slowdown compared to the same quarter in 2017 and a slight increase compared to the previous quarter, which is likely supported by the growth in new car sales at the beginning of the year due to changes in tax regulations, namely tax relief, which came into effect at the beginning of this year,” RBA analysts stated.

They also indicated that high-frequency indicators for the first quarter of this year, where industrial production has nearly stagnated and the construction sector has only modestly increased, suggest that personal consumption will remain the leading driver of economic growth in that quarter.

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“Supporting these trends are expectations for another successful tourist season, as well as recent developments indicating a slight recovery in credit activity. However, consumer confidence and trust indices, which showed a slight deterioration in March, indicate a possible slowdown in economic activity and suggest caution,” RBA analysts concluded, who expect retail growth of about 3 percent for the entire year.