Hungary’s retail sales slowed in October to 2.6% according to both raw and calendar-adjusted data, statistics office KSH said on December 16. The reading confirms a preliminary estimate released earlier this month, and represents the second lowest result seen in 2016.
Throughout the year, strong private consumption has counterbalanced the feeble performance of the industrial and construction sectors, and is expected to offer some support to GDP growth in the final quarter of the year. However, a slowdown in retail sales growth in October, together with deteriorating confidence in November, raises concerns over those hopes.
In October, in specialized and non-specialized food shops, the volume of sales adjusted for calendar effects rose 1.6%. Turnover increased 4.4% in non-food retail trade and 1.2% in automotive fuel retailing. Across the first ten months of the year, the volume of sales – according to calendar-adjusted data – was 4.7% higher 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 pushed to 7.6% y/y in the first nine months of the year - and low inflation will continue to provide a strong base for household consumption next year.