Years spent topping European inflation rankings have left Estonians more cautious about what they put in their shopping carts. Retail sales volumes fell 3 percent last year.

"The initial calculations have been done, and last year fell short of 2023 levels," said Prisma Estonia country director Teemu Kilpiä. "But this is a general trend in retail in 2024."

Although sales declined for the year overall, December indicated that the worst may already be over.

December retail sales rose by 13 percent compared with November, marking the highest on month growth seen in seven years. Sales also increased by 1 percent on year. The last time December saw annual growth was in 2022.

As a result, December marked the end of 27 consecutive months of declining retail sales in Estonia. Even so, the downturn lasted so long that sales volumes have now dropped to spring 2021 levels.

"If we compare it to the previous year, we reached last year's figures and even slightly surpassed them," noted Euronics Estonia retail director Martin Soom.

"People were still cautious; their gift shopping was perhaps cheaper," he acknowledged. "But overall, we had a very strong December. And this trend is continuing in January — people are still coming in, and we're slightly ahead of where we were in January 2024."

Some relief, but tough year ahead

Looking ahead to the new year, both analysts and retailers remain cautiously optimistic. On one hand, wages are rising faster than prices, but on the other, considering the increase in income tax, real net wages are actually in the negative.

"Wages are going up, but customers are still cautious about spending in 2025," said Kilpiä. "From Prisma's perspective, we're hoping for a slight positive increase, but it will still be another challenging year."

"I'm afraid this growth will remain very modest," said SEB analyst Mihkel Nestor. "One thing is measuring this in euros, but another is measuring it in quantities."

SEB's forecast for private consumption growth, he noted, is very slow — only just over 1 percent.

"And I believe this will be reflected in stores too: revenue figures won't significantly increase," Nestor explained. "But after such a long period of decline, I think even a slight improvement will be enough to bring some relief."

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