Bigbank economist: abolishing tax refund did not bring expected consumer boom

Estonian retail is in a difficult position. According to statistics, retail sales volumes fell by 1% in May 2026 compared to the same period last year. Bigbank chief economist Raul Eamets warns that food store sales have been declining for over two years and abolishing the tax refund did not bring the hoped-for recovery to the sector.

Estonia's retail sector continues to face challenging times. According to Statistics Estonia, retail sales volumes fell by 1% in May 2026 compared to the same month last year, and Raul Eamets, chief economist at Bigbank, does not foresee fundamental change in the near term.

Food store decline continues for over two years

According to Eamets, the sales dynamics of food shops have traditionally been negative. "I looked at previous data: the last time we saw growth in food store sales was in March 2024, meaning more than two years ago," he said. While petrol station chains previously kept the overall retail figures in positive territory, their sales grew by 2.3% in May, but this was not enough to push the entire sector into growth. "At one point we were used to seeing 15-20 percent growth there due to price competition in the fuel market. The Middle East crisis changed the situation," explained Eamets.

Cars rise, wholesale collapses sharply

The only ones doing well are car dealers, whose sales grew by 10%. However, it should be noted that in early 2025 they fell into a very deep hole due to vehicle taxation, from which they have now mostly recovered.

Wholesale figures are also a cause for concern. Overall wholesale (excluding motor vehicles) was 25% down compared to the previous year, which is a very sharp decline, emphasised Eamets.

Abolishing tax refund did not deliver expected effect

"Ultimately, both large retail chains and smaller food shops are going through hard times. The abolition of the tax refund did not bring about the additional consumer boom that was expected and hoped for at the start of the year. This was also confirmed by representatives of the retail sector themselves in their interviews," said Eamets.

He attributes one reason to the fact that wealthier people, who received more tax refunds, tend to spend that money abroad, where many consumer goods such as clothes and footwear are cheaper than in Estonia. There has also been a significant increase in the share of cheap Chinese online shops in Estonian shopping behaviour.