Macroeconomic indicators and consumer confidence effects on food retail sales: insights from emerging markets

Abstract

Purpose - This study aims to examine the short-and long-term effects of macroeconomic indicators and consumer confidence sub-indices on food retail sales volume. Design/methodology/approach - The research utilizes monthly time series data for the period 2012:02-2025:02; the autoregressive distributed lag model (ARDL) bounds testing approach is employed to account for differences in the integration levels of the series, and the findings are supported by a two-stage generalized method of moments (GMM) method to address potential endogeneity issues. Findings - The results indicate that, while the policy interest rate has a negative effect in the ARDL model, it has a positive effect in the GMM model. In addition, exchange rate shocks positively affect retail sales volume in both the short-and long-run. Inflation, on the other hand, has a significant and negative effect on retail sales volume across both models. General economic expectations, unemployment and saving tendency variables exhibit behavioral sensitivities as expected, although the direction of these effects varies across models. Originality/value - The study offers an integrated framework combining macroeconomic variables, consumer sentiment components and behavioral moderators - providing novel evidence on consumption dynamics in an inflation-prone developing economy and addressing methodological gaps through ARDL-GMM integration.