Consumer spending began 2Q25 on a strong note, with retail sales rising by 5.1% y/y in April—up from a revised 1.2% in March (previously 1.5%), and significantly above market expectations of a 3.1% increase. On a monthly basis, retail volumes rebounded by 0.9%, following a 0.3% decline in March. Despite April’s strong performance, retail activity over the past three months remains 0.5% lower compared to the preceding three-month period. This suggests that household spending may be losing momentum, potentially weighing on broader economic growth. The spike in annual sales likely reflects holiday-related spending and two-pot pension withdrawals coinciding with the new tax season.
Where consumers are spending more – and less
Spending patterns showed broad-based increases across most store categories:
- General dealers and clothing stores led the surge, with growth of 5.3% and 12.5%, contributing 2.3 percentage points (ppts) and 2.1ppts to the headline figure, respectively.
- Furniture stores and other retailers (including online platforms) posted robust gains of 9.2% and 5.0%, contributing 0.4ppts and 0.6ppts, respectively.
- Food retailers saw a mild rebound, with sales up 2.6%, compared to a modest 2.3% decline in March.
- Pharmaceuticals slowed from a robust 7.0% growth in March to 2.8% in April.
- On the downside, hardware stores experienced a sharp 8.3% decline, subtracting 0.7ppts from the overall figure.
Outlook
Year-to-date retail sales are up 4.3% y/y, indicating a relatively strong start to 2025. This reflects improved household finances, supported by lower inflation and reduced borrowing costs. However, the sharp slowdown in March signals rising consumer caution, likely due to the fading impact of once-off two-pot pension withdrawals and heightened uncertainty both domestically and globally.
Looking ahead, consumer spending is expected to remain a key driver of growth in 2025, albeit at a slower pace than previously forecast. The outlook is clouded by global trade tensions, local political uncertainty, and sluggish domestic growth, which could impact employment and further dampen consumer confidence.
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