July retail trade data suggests that households have started to adjust to the tighter economic environment and that consumption in the third quarter is no longer as much of a drag on economic growth as it was in the first half of the year.
According to a report released by the Hungarian Central Statistical Office on Monday, the volume of retail sales in July was 3.8 percent higher than a year earlier in raw data and 4.3 percent higher in calendar-adjusted terms. Gábor Regős, head of the Macronome Institute, said to MTI that the average increase in retail sales was certainly a positive result, but the picture is less encouraging when looking at the retail sales by business type.
The turnover of grocery stores has fallen, which the expert explained was due to rising inflation.
Although Hungarian households have not yet cut back their food consumption significantly, they are reaching for other products on the shelf.
As a result, people have started to look for cheaper, possibly lower quality or discounted products. According to Gábor Regős, a similar reason may be behind the growing second-hand goods trade.
At the same time, the analyst found it surprising that the turnover of petrol stations has increased. He said this was due to the fact that people, fearing a fuel shortage, had started to fill up in large quantities, even in cans. On the other hand, it is also possible that fuel tourism has not completely disappeared, due to the 480 forint price cap on fuel in Hungary.
Gábor Regős was joined by Gergely Suppan, senior analyst at Magyar Bankholding, who said that retail sales in July fell short of expectations. According to him, this was due to the fact that inflation has risen sharply, in addition to the effects of the personal income tax refund, the 13th month pension, and the six-month arms money wearing down.
Suppan forecasts that the slowdown in retail sales growth could continue in the coming months due to rising inflation, steep increases in utility bills for some households, with real wages expected to fall in the final months of the year and rising interest rates. Other analysts warn of a similar, somewhat negative outlook as well, with an expected slowdown in sales in the coming months.
Featured photo: Pixabay