According to preliminary retail sales data released by the Hungarian Central Statistical Office (KSH), in the month of August 2017 the volume of sales grew by 4.6 percent year-on-year, and thus the upward sales trend, in place for 50 months, has continued. Thanks to the six-year wage increase and tax cut deal, wages are set to increase even further and that signals continuing consumption growth, as well.

The fact that households tend to purchase more and more durable consumer goods is a sign of growing consumer confidence: the sales of non-food products rose by 7.7 percent in the observed period. This trend has also been reflected by the dynamic growth of consumer credits in recent months.

The Government’s housing programme has also contributed to the sales increase of durable consumer goods. In the first half of 2017, the number of building permits rose by 40 percent year-on-year, while that of newly built homes was up by 46 percent. The decoration of new homes with furniture, home design and electronic products has also fuelled sales at relevant retailers.

Retailers are also expecting further increases: in the second quarter of 2017, the volume of investment in the sector was up by 14 percent year-on-year.

In accordance with the six-year wage agreement, the minimum wage and the guaranteed minimum wage are set to rise by another 8 percent and 12 percent, respectively, as of 1 January 2018. Higher wages are seen to give additional momentum to consumption and subsequent retail sales growth.

(Ministry for National Economy)