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Analysts surprised by Hungary March retail data

The development of Hungarian retail sales in March was a rather strong positive surprise. On a monthly basis, after a contraction of 0.6% in the previous month, sales volumes across all sectors rose by 2% in seasonally- and working-day adjusted terms. The dynamic one-month growth also led to a strong improvement in the year-on-year index, which rose by 4.2%, adjusting for the calendar effect. Such a pace of expansion was not at all expected by the analyst community, especially in light of the preliminary release of first quarter GDP, where retail trade was not highlighted as a strong performing sector.


Looking at the details, the most influential surprise came from food sales, which showed dynamic growth in March after February. It is quite rare for this subsector to post consecutive monthly growth rates close to 1%. However, this could be due to the Easter effect, although calendar-adjusted data should (in theory) take care of this. Non-food sales also showed a significant correction after the decline in February. On a monthly basis, analysts saw an increase of 0.9% in this segment. There was also strong growth in sales of books, newspapers and second-hand goods.

Researchers saw a correction in mail order and internet sales, which rose by almost 2% after a sharp fall in the previous month. Sales in stores selling higher-value goods (such as electronics, furniture, etc.) also increased somewhat, but the performance was rather below average. It would therefore appear that the coupon payments on retail government bonds (together with the accumulation of transfers in previous months) have already had some positive impact on retail sales in March. It remains to be seen, however, why this did not boost purchases of big ticket items to a greater extent. Last but not least, fuel sales were also somewhat puzzling, as fuel prices continued to rise by 2.1% month-on-month in March. In fact, sales rose by 0.5% on a monthly basis.

By historic standards, retail sales turnover volume is now at levels last seen in the summer of 2021, following the surge in March, so the overall picture is also improving, but a full recovery is still some way off.

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