Manufactured goods worst hit by price rises
Estonia's retail turnover fell by 13 percent on-year in March. Manufactured goods were the most affected which experts say shows consumers are being more careful.
While turnover was down 6 percent in February, it fell even further in March, data from Statistics Estonia show.
The fall was the steepest in stores selling computers, books, sports equipment, and toys at 28 percent, followed by 21 percent in shops selling housewares, home appliances, and building materials stores.
Jan Andre, head of purchasing at the electronics chain Euronics, listed three contributing factors.
"In our industry, we have had three very turbulent years where people were largely in home offices and they were buying more home appliances and home electronics. That's one reason. The other reason is that it has been reported in the media that the property market has cooled. The third could likely be the rise in the Euribor," he told Friday's "Aktuaalne kaamera".
The price of electronics and household appliances has also risen 14 percent on-year.
"What we've felt — realized — is that the lifespan of these products, or this replacement cycle, has gone up. If we take TVs, which are a very big [product] group, they are purchased less; [but] if we talk about washing machines and fridges, then not so much, volumes have increased there anyway," Andre said.
Another area to experience a sharp fall in recent months is industrial and construction goods. The last boom was at the end of 2021 when cash from the second pillar pension fund hit stores, said SEB analyst Mihkel Nestor.
But over the last year, prices have risen.
"The consumer basket is still 15 [percent] more expensive than it was, and inevitably even more so for poorer households in particular. In the average family budget, when food quickly becomes expensive, there is less money for the rest of the commodity groups," Nestor said.
In several areas, the retail sector initially pushed up prices, but now demand has slowed.
"If the 14 percent drop in volumes continues, I would have a little hope that at some point there will have to be some sort of reduction. There has been an opportunity to fish in the muddy waters, to raise prices where there is no reason to do so because of energy prices — that should stop now," Nestor said.
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Editor: Helen Wright
