BG’s retail sales for December 2025 declined by 0.40% compared to November’s 0.80% growth, according to the latest release from the Sigmanomics database. This contraction contrasts with the prior month’s rebound and signals a moderation in consumer spending momentum as the year closed. The 12-month average growth rate stands at 0.48%, reflecting generally positive but volatile retail activity over the past year.

Drivers This Month

• Consumer caution amid rising borrowing costs and inflationary pressures.
• Supply chain disruptions affecting inventory replenishment.
• Geopolitical tensions in the region dampening consumer confidence.

Policy Pulse

The Central Bank of BG has maintained a cautious stance, keeping interest rates steady but signaling potential hikes if inflation persists. The retail sales contraction aligns with tighter monetary conditions aimed at cooling demand.

Market Lens

Following the release, the BGN currency showed mild appreciation, reflecting market expectations of continued monetary tightening. Short-term bond yields edged higher, pricing in a cautious outlook for consumer demand.

Retail sales are a critical barometer of domestic demand and economic health. December’s -0.40% MoM decline contrasts with November’s 0.80% and October’s flat reading, indicating a loss of momentum. Year-over-year, retail sales grew by 1.00% compared to December 2024, suggesting that while growth persists, it is slowing.

Monetary Policy & Financial Conditions

Monetary tightening over the past six months has increased borrowing costs, with the benchmark interest rate rising by 75 basis points since mid-2025. This has constrained consumer credit and dampened discretionary spending, contributing to the retail slowdown.

Fiscal Policy & Government Budget

Fiscal stimulus measures have been modest, with the government prioritizing budget consolidation amid rising debt servicing costs. Limited fiscal support has reduced the cushioning effect on household incomes.

External Shocks & Geopolitical Risks

Heightened geopolitical tensions in Eastern Europe have disrupted trade flows and injected uncertainty into consumer and business sentiment. Energy price volatility has further pressured household budgets, reducing retail expenditure.

Drivers This Month

• Shelter and utilities spending remained stable, contributing 0.10 pp.
• Automotive and durable goods sales declined, subtracting -0.30 pp.
• Food and beverage retail saw a mild contraction, reducing overall growth by -0.20 pp.

Policy Pulse

The retail sales contraction aligns with the central bank’s inflation-targeting strategy. Inflation remains above target at 4.20%, prompting cautious monetary policy that weighs on consumer credit availability.

Market Lens

Immediate reaction: The BGN currency appreciated 0.15% against the EUR within the first hour post-release, while 2-year government bond yields rose by 5 basis points, reflecting expectations of sustained monetary restraint.

Looking ahead, BG’s retail sales trajectory will depend on several key factors. The baseline scenario projects modest growth of 0.20% MoM in early 2026, supported by stable employment and gradual easing of supply constraints. However, downside risks from persistent inflation and geopolitical instability could push retail sales into further contraction (-0.50% to -1.00%). Conversely, a bullish scenario (0.50% to 1.00%) could emerge if fiscal stimulus increases and monetary policy shifts to a more accommodative stance.

Bullish Scenario (20% Probability)

• Improved consumer confidence due to easing inflation.
• Government introduces targeted fiscal support.
• Geopolitical tensions subside, stabilizing energy prices.

Base Scenario (60% Probability)

• Retail sales grow modestly by 0.20% MoM.
• Monetary policy remains cautious but accommodative.
• Supply chain issues gradually resolve.

Bearish Scenario (20% Probability)

• Inflation remains elevated, eroding purchasing power.
• Monetary tightening intensifies, restricting credit.
• Geopolitical risks escalate, dampening sentiment.

December’s retail sales contraction in BG signals a cautious consumer environment heading into 2026. While the 12-month average growth remains positive, the recent slowdown reflects tightening financial conditions and external uncertainties. Policymakers must carefully balance inflation control with support for domestic demand to sustain economic momentum. Monitoring retail sales alongside inflation, employment, and geopolitical developments will be critical for anticipating the economy’s near-term trajectory.

Key Markets Likely to React to Retail Sales MoM

Retail sales data in BG often influence several key financial markets, reflecting shifts in consumer demand and economic outlook. The following symbols historically track or react to retail sales movements, providing traders and investors with actionable insights:

• ELI – A major retail sector stock sensitive to consumer spending trends in BG.
• BGNEUR – The BGN/EUR currency pair, reflecting macroeconomic sentiment and monetary policy expectations.
• USDBGN – USD/BGN pair, sensitive to capital flows and risk appetite linked to retail data.
• BGBTC – A crypto pair that can reflect speculative flows reacting to economic data.
• BTG – A consumer discretionary stock correlated with retail sales performance.

FAQs

What does the December 2025 Retail Sales MoM figure indicate for BG’s economy?

The -0.40% contraction suggests a moderation in consumer spending, reflecting tighter financial conditions and external uncertainties.

How does this retail sales data affect BG’s monetary policy outlook?

The data supports a cautious monetary stance, with potential for further tightening if inflation remains above target.

Which markets are most sensitive to BG’s retail sales data?

Key markets include BG’s retail sector stocks like ELI, currency pairs such as BGNEUR, and related financial instruments.

Final takeaway: December’s retail sales contraction signals caution among BG consumers, underscoring the need for balanced policy to sustain growth amid inflation and geopolitical risks.

Updated 1/8/26

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.