In December 2016, the volume of retail sales was up by 2.8 percent year-on-year, while in the entire year of 2016 the sector posted sales growth of 4.5 percent. Thus, the upward retail sales trend has been in place for the 42nd consecutive month. Thanks to improving employment indicators and low inflation, in 2016 the rate of consumption growth was the highest since 2003.

In December, sales in the non-food sector grew by 3 percent year-on-year. This is an especially encouraging sign, as it reveals that households have been carrying out intended purchases which had been delayed during the crisis, and thus the weight of durable consumer goods has risen within the basket of goods and services.

In the final month of the previous year, sales at non-specified food retailers increased by 3.2 percent, a key factor as families in this field tend to have a balanced spending pattern in every season. Putting the data in international perspective shows that the sales increase of the Hungarian retail sector was the tenth highest within the EU, well above the EU average of 2.3 percent. Regarding sales at mail order and parcel delivery service providers, a segment encompassing a wide range of products with a share of 3.7 percent within the total sales volume, soared by 25 percent year-on-year in December, and thus a long-term growth trend has continued. Since January 2010 and the beginning of 2014, the retail sector posted sales growth of 19.1 percent and 16.1 percent, respectively, in Hungary.

As a result of massive wage increases and rising household confidence, consumption expenditure is predicted to have increased in the year 2016 by some 5 percent, in line with the Macro-Economic and Budget Outlook published in December 2016.

The pace of growth in households’ disposable income has exceeded the sales increase of the retail sector, which signals that households’ propensity to save has continued to strengthen.  This also implies that there is still room for carrying out long-planned but delayed purchases.

Accordingly, the positive retail sales growth and household consumption trend is expected to continue, underpinned partly by the wage deal brokered in November 2016.

(Ministry for National Economy)