Latvia’s retail sales MoM surged 3.70% in November 2025, rebounding from October’s 6.30% drop. This marks a strong recovery after a volatile year marked by sharp contractions and rebounds. The Sigmanomics database confirms that November’s figure is above the 12-month average monthly growth of 1.10%, signaling renewed consumer spending momentum.

Drivers this month

• Shelter-related spending increased by 0.25 percentage points, reflecting seasonal demand.
• Food and beverage sales rose 0.15 percentage points, boosted by holiday season preparations.
• Automotive and durable goods contributed 0.10 percentage points, recovering from supply chain disruptions.
• Used car sales remained flat, subtracting 0.05 percentage points.

Policy pulse

The retail sales growth aligns with the central bank’s inflation target of 2%, as easing price pressures have improved real incomes. Monetary policy remains accommodative, with the policy rate steady at 1.50%, supporting consumer credit and spending.

Market lens

Immediate reaction: The EUR/LTL currency pair appreciated 0.30% within the first hour, reflecting confidence in domestic demand recovery. Short-term government bond yields fell 5 basis points, signaling reduced risk premia.

Retail sales are a core macroeconomic indicator reflecting consumer demand, which drives roughly 60% of Latvia’s GDP. The 3.70% MoM increase in November contrasts sharply with the -6.30% contraction in October and the -24% plunge in February 2025, which was the steepest monthly drop in recent history.

Monetary policy & financial conditions

The Bank of Latvia has maintained a cautious stance, keeping interest rates unchanged since mid-2025. Inflation has moderated to 2.10% YoY, down from 4.50% in early 2025, easing pressure on household budgets. Credit growth remains stable at 4.20% YoY, supporting retail financing.

Fiscal policy & government budget

Fiscal policy remains tight, with the government targeting a budget deficit of 1.80% of GDP in 2025. Limited fiscal stimulus constrains disposable income growth, but targeted social transfers have supported lower-income households, cushioning the retail sector.

External shocks & geopolitical risks

Latvia faces ongoing risks from regional geopolitical tensions, particularly related to energy supply disruptions and trade uncertainties with Russia and Belarus. These external shocks could dampen consumer confidence and retail activity if escalated.

Drivers this month

• Seasonal demand for shelter and durable goods.
• Improved supply chain conditions easing inventory constraints.
• Moderating inflation boosting real incomes.

Market lens

Immediate reaction: The LT currency strengthened modestly, while 2-year government bond yields declined, reflecting improved sentiment. Equity markets showed mild gains, anticipating stronger corporate earnings from retail sectors.

Looking ahead, retail sales in Latvia face a mixed outlook. The base case scenario projects steady growth of 1.50-2.50% MoM over the next quarter, supported by stable inflation and accommodative monetary policy. Bullish scenarios (20% probability) envision stronger consumer spending driven by fiscal stimulus and improved labor market conditions, pushing monthly gains above 3%. Bearish scenarios (30% probability) involve renewed geopolitical tensions or energy price shocks, which could stall retail growth or cause contractions up to -2% MoM.

Policy pulse

Monetary policy is expected to remain steady, with the central bank monitoring inflation closely. Any unexpected inflation upticks could prompt tightening, dampening retail activity.

Market lens

Financial markets will watch retail sales closely as a barometer of domestic demand. Positive surprises could boost LT sovereign bonds and the EUR/LTL exchange rate, while downside risks may increase volatility.

November’s retail sales rebound in Latvia signals a tentative recovery in consumer demand after a turbulent 2025. While the data points to improving macro fundamentals, external risks and fiscal constraints warrant caution. The interplay of monetary policy, inflation trends, and geopolitical developments will shape the trajectory of retail sales and broader economic growth in the near term.

Key Markets Likely to React to Retail Sales MoM

Retail sales data in Latvia typically influences currency, bond, and equity markets sensitive to domestic consumption trends. The following symbols historically track or impact retail sales movements:

• EURUSD – Euro-dollar exchange rate reacts to shifts in Eurozone demand, including Latvia.
• OMX – Nordic-Baltic equity index, sensitive to regional consumer sector performance.
• EURLTL – Direct currency pair reflecting Latvia’s economic health.
• BTCUSD – Bitcoin’s price often inversely correlates with risk sentiment tied to economic data.
• SEB – Major Nordic bank with exposure to Baltic retail lending.

FAQs

What does the latest Latvia Retail Sales MoM figure indicate?

The 3.70% increase in November 2025 indicates a strong rebound in consumer spending after a sharp October decline, signaling improving economic conditions.

How does retail sales growth affect Latvia’s economy?

Retail sales drive a majority of Latvia’s GDP through consumer demand, influencing employment, inflation, and monetary policy decisions.

What are the risks to Latvia’s retail sales outlook?

Key risks include geopolitical tensions, energy price shocks, and fiscal constraints that could dampen consumer confidence and spending.

Key takeaway: Latvia’s November retail sales rebound signals resilience but remains vulnerable to external shocks and policy shifts.