Hungarian retail sales growth in July – adjusted for calendar effects – accelerated more than previously estimated, but still remains the second slowest rate of expansion year to date, according to a report from statistics office KSH released on September 23.
The indicator rose 4% y/y in July, while the initial estimate released on September 5 earmarked growth at 3.8%. Strong private consumption helped the Hungarian economy rebound in the second quarter, and is expected to continue to contribute in the second half of the year. However, the slowdown in retail sales growth in July, together with a drop in consumer confidence in August, raises some concern.
Following a sharp slowdown in January, the year has for the most part enjoyed an extended recovery. A series of hefty results saw retail sales growth ranging between 4.2% and 6.7% y/y in adjusted terms in February to June. While July's pace of expansion beats only January's, the base was noticibly high for both months.
According to raw data, the growth of sales in retail shops slowed to 2.9% in July from 5.7% in the previous month. In specialized and non-specialized food shops, the volume of sales adjusted for calendar effects rose 1.7%. Turnover increased 6.7% in non-food retail trade and 2.5% in automotive fuel retailing. In the fist seven months of the year, the volume of sales – according to both raw and calendar-adjusted data – was 5% up compared to the same period in 2015.
Retail sales are being closely watched across Central Europe due to consumption's major role in economic growth over the medium term. Analysts in Hungary forecast that rising employment, income tax reduction, net real wage growth - which came at 7.5% y/y in the first seven months of the year - and low inflation will continue to provide a strong base for household consumption this year.