Czech retail sales grew more than expected in September driven by a double-digit growth in auto sales. Retail sales rose 6.2% y/y in September, speeding up from a 2.7% hike in the previous month, data from the statistics office showed on November 5. The reading overshoot market expectations for a 5.5% y/y growth, according to a Reuters poll.

On a working day adjusted basis, retail sales in the ninth month of the year advanced 4.5% y/y and when adjusted for seasonal factors they moved up by 0.3% m/m, after a 0.6% m/m rise in August.

Auto sales returned to double-digit growth in September going up by 15.3% y/y, after a 7.8% y/y hike in August. The sector has been a key driver of the country’s economic rebound.

Retail sales, including automotive fuel, also went up but at the much weaker of 2.4%, yet, accelerating from a 0.8% y/y rise in August.

IntelliNews comment: Improving consumer confidence amid the recovering economy is supporting the rise in Czech retail sales. Sales increased in each month of 2014 except for May mainly due to calendar effects.

We expect retail sales in the county to increase in the months to come on the back of rising household consumption which should edge up by 1.7% in 2014 and gain speed to 1.9% in 2015, according to the European Commission’s autumn forecast released earlier this week. The latest data from the Czech statistics office showed household consumption rising 1.9% y/y in the second quarter, registering a growth for the fourth straight quarter.

Low inflation and rising real wages should also support the retail sales growth.