The raises granted to the public sector employees, the thirteenth salary which was paid in education and administration, but also the rising minimum wage have fuelled a boom in the sales logged by retailers. At first sight, this is a joy both for the retailers and for the consumers. After all these transition years, the living standards should in fact improve, as this means bigger consumption and Romania can thus finally prove that it is a genuine emerging market. However, a surge in consumption triggered by higher salaries can lead to macroeconomic slippages, unless it is joined by growing labour productivity.
An explosion occurred in January. Not everybody heard it, but it was mainly felt by the retailers or, in other words, by their bank accounts: the sales of foods and non-foodstuffs (cheese, beer, tobacco, shampoo, aspirin and TV sets) boomed in January, going up 21% as compared to January 2003.
This is the biggest month-on-month growth logged in the retail sector in the past five years. This indicator supplied by the National Statistics Institute (INS) is not very much advertised, but provides a very accurate gauge for the 'mood' of Romanian buyers.
In fact, the mood was very bright indeed in January for many people: the one million Romanians working in the public sector got a 6% raise, whereas some of them (those working in administration and education) also got the thirteenth salary, which they rushed to spend immediately, according to the latest data.
Moreover, starting January 1, 2004, the minimum wage climbed to 2.8 million ROL, up 12%. In fact, the raise was mainly felt in the public institutions, as well.
The boom was also caused by the rush to buy products in instalments, before the lending restrictions imposed by the National Bank of Romania entered effect on February 1: the sales of furniture and electrical devices went up 53%, after having climbed 65 percent in December.
"Consumption is soaring. The minute they make some money, Romanians rush to spend it. They seize the moment. Romania is different from the West, where the balance is not so tilted towards consumption. This is about the consumer's education. The growth is good, it shows that the economy is finally beginning to work, it points to dynamism. However, the main risk lies in the evolution of the trade balance deficit," says Lucian Liviu Albu, head of the Prognosis Institute of the Romanian Academy.
In fact, retailers have been doing increasingly better since last September: sales went up 6-7% in September 2003 compared to the year-ago period, then surged 12% last December, which made Christmas the perfect holiday season.
According to the National Statistics Institute, retail includes the resale of goods (automobiles or auto parts not included) mainly to the public, in stores and supermarkets, at street stands, by mail orders. Thus, retail does not include the sales of foodstuffs to natural persons on the rural market or the sales of foods and drinks for consumption in public places.
Consequently, another factor behind the boom could be the buyers' heftier appetite for trips to the big stores, instead of going to the market. As a matter of fact, retail has boomed especially since last September, when two more hypermarkets emerged on the Bucharest market (which accounts for 20% of the nationwide retail market): the first Cora and the second Carrefour.
sorin.pislaru@zf.ro ; georgiana.stavarache@zf.ro;
ionut.bonoiu@zf.ro
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