In November 2016 and in the period January-November 2016, the volume of retail sales rose by 4.5 percent and 4.7 percent year-on-year, respectively, and thus a positive sales trend has been in place for 41 months in a row. Household consumption growth is expected to pick up in coming years, fuelled by modest inflation and the Government’s pro-family measures.

The volume of sales at specialized and non-specialized food retailers was up by 2.3 percent, while that of the non-food sector soared by 7.4 percent year-on-year, after a robust increase in the past more than three years. This growth trend shows that the purchasing power of Hungarian households has been increasing. Purchases delayed during the crisis period are being realized, and the share of big-ticket items is growing.  The rate of retail sales growth in Hungary was higher than the corresponding indicator in the EU for the month of November, which showed a year-on-year increase of 3.4 percent.

Thanks to improving employment indicators and low inflation, in 2016 consumption growth has hit the highest rate since 2003. This trend is also being reflected by trends in lending. Robust wage increases and rising consumer confidence have resulted in household consumption spending growth of 5 percent in 2016, in line with the prior estimate of the Macro-Economic and Budget Forecast of December.

As of this year, the Government-initiated wage agreement, which stipulates minimum wage and guaranteed minimum wage increases of 15 percent and 25 percent, respectively, in 2017, and another 8 percent and 12 percent, respectively, in 2018, is seen to boost consumption and GDP growth through higher household incomes.

(Ministry for National Economy)