Estonians consumed less in November 2024 than in the same month in 2023, with retail sales volumes dropping by one percent.

 While shopping carts were reportedly full in the final days of the year, retailers had little reason to celebrate.

According to Statistics Estonia, food sales volumes fell by four percent in November, with even pre-Christmas sales coming in lower than expected.

This discrepancy between "full carts" and declining sales raises questions about whether the spike in late-year purchases was sufficient to counterbalance weaker demand earlier in the penultimate month of the year.

Retail statistics could have painted a more favorable picture if vehicle sales were included, given a pre-tax rush that "literally emptied stores."

However, as Statistics Estonia analyst Johanna Linda Pihlak told "Aktuaalne kaamera": "This falls under a different category, not retail. It's part of the retail and wholesale trade of motor vehicles, where retail and wholesale are combined."

The exclusion of vehicle sales limits the scope of retail analysis, particularly during periods of extraordinary consumer behavior.

Rimi CEO Kristel Mets meanwhile said: "November is no different from October and September. Food sales have been on the decline for two years now."

Aggressive discounting helped stabilize sales compared with 2023, yet this trend reflects increased competition and reliance on promotions.

Staples such as butter are now sold below cost to attract shoppers, underscoring the challenge of maintaining profitability in a low-demand environment.

Tech sales have also taken a hammering.

Electronics retailer Klick's purchasing manager Joosep Saad warned that rising taxes would constrain consumer spending this year.

He said: "Spending desires and taxes both compete for the customer's wallet. When mandatory expenses take a large share, discretionary spending has to take a back seat."

Macroanalyst Triin Tapver at Estonian bank LHV said she, too, was skeptical about purchasing power recovery. "Wages are no longer growing as quickly as in previous years. Inflation will outpace wage growth, delaying recovery to next year," Tapver said.

While falling interest rates may offer relief to borrowers, increased taxes could negate these benefits, creating a zero-sum scenario.

Retailers and consumers face a challenging environment shaped by subdued wage growth, rising taxes, and fierce competition.

Even positive developments, such as lower interest rates, are offset by broader fiscal pressures, requiring nuanced solutions from policymakers.

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