bne IntelliNews – Hungarian consumers cut spending in June
Retail sales growth in Hungary slowed to an annual rate of 4.1% in June from 12% the previous month (chart), reflecting a shift in consumer habits after the government announced lockdown measures austerity to fill the budget deficit and that inflation has galloped 20 years. -high. Adjusted for calendar year effects, retail sales rose 4.5%, below analysts’ expectations of 8%. On a monthly basis, retail sales fell for the third straight month, down 0.5%.
Hungary’s retail sector started the year on a strong note, boosted by massive pre-election tax transfers and wage increases. Months before the election, families received a tax refund, pensioners a 13-month pension, a bonus for armed personnel was paid in February and the minimum wage was increased by 19%, resulting in double-digit growth in the industry. between February and May.
In June, adjusted food sales edged down 0.3%, non-food sales increased 2.5% and vehicle fuel sales jumped 23.6% year-on-year, driven by regulated prices .
Food and non-food sales contracted over one month, down 0.25% and 3.6% respectively.
In absolute terms, retail sales amounted to HUF 1.43 trillion (€3.6 billion). Food sales accounted for 45% of the total, non-food sales 36% and gas station sales 19%.
In the first six months, retail sales increased 10.4% unadjusted and 10.3% adjusted year-over-year. Adjusted food sales increased 2.2%, non-food sales increased 12.5% and vehicle fuel sales increased 30%.
June retail trade data signals further slowdown for the sector in the second half of the year, which is bad news for the economy, as consumer spending was a major driver of GDP growth in the first quarter of more by 8%.
Rising inflation has wiped out much of the growth in real wages and the 25% rise in food prices is increasingly dampening consumption, Erste Bank said in a note. The weak base and phasing out of oil tourism has also reduced fuel sales and retail sales in general.
ING Bank analyst Peter Virovacz pointed to a second consecutive monthly contraction in food sales and the slowest growth in non-food sales on an annual basis since the pandemic, signaling that Hungarian consumers adapt to rising inflation and austerity measures. This could be seen as the trend before a recession, but it’s too early to tell, according to Virovacz.
The impact of energy subsidy cuts is not included in the June data, as the government announced it would cut energy subsidies last month.
Hundreds of thousands of households will pay the market price for gas and electricity above the level set by the government as the national average, which many analysts say is too low as it includes empty houses, cottages and summer residences.
The collapse in household demand is one of the main reasons why Hungarian economic growth is expected to slow dramatically in the second half of the year, and the possibility of a technical recession is not excluded, business portal Portfolio.hu commented.