Hungary’s retail sales increased 5.7% y/y in June, according to both raw and calendar-adjusted data, statistics office KSH said in a preliminary estimate on August 3.
The reading suggests an extended recovery in retail turnover following a sharp slowdown in January, as it remained at the same level as in the previous month. Retail sales in Hungary have been increasing since July 2013 on the back of a tightening labour market and resultant consumer confidence, and remain a vital driver for the economy.
Consumer confidence in July stood close to the peak reached at the beginning of the year. Improved confidence raises hope that domestic consumption will continue to support the economy. Stuttering industry and construction produced a remarkable slowdown in Q1.
The unadjusted retail sales figures were, however, below the 6.8% recorded in May. In specialized and non-specialized food shops, the volume of sales adjusted for calendar effects rose by 3.4%. Turnover increased 9.7% in non-food retail trade and 3.6% in automotive fuel retailing.
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 five months of the year - and low inflation will continue to provide a strong base for household consumption this year.