July Retail Sales Increased 3.8%, Indicating Hungarians Are Adjusting to Inflation (Hungary)
Inflation is affecting nearly everyone around the world, including Hungary. But recently released figures from July show that Hungarians are adjusting to inflation.
In July 2022, there was a 3.8% increase in retail sales volume based on raw data. When you adjust the data for calendar effects compared to last year, the figure becomes 4.3%.
Looking at a monthly basis, shop turnover grew by 0.5%.
Specific Figures by Sector
It is worth noting that not every sector saw an increase in sales. Specialized and non-specialized food shops had a decrease of 2.9% (calendar-adjusted). For non-specialized food and beverages, the volume dropped by 3.3%. Given that this category makes up 75% of food retailing, it is an important figure.
Specialized food, tobacco, and beverage stores also had a drop of 1.3%.
However, non-food retailing compensated for this with an increase of 3.2%. Automotive fuel retailing had a very large increase of 27.6%. For motor vehicles and stores selling motor vehicle parts and accessories, the rate was 3.5%.
Secondhand goods shops also saw an impressive increase of 14%. Other increases included the following:
- 7.1% in medical goods, pharmaceutical, and cosmetics shops
- 4.7% in clothing, footwear, and textile shops
- 4.5% in computer equipment, books, and other specialized stores
- 3.3% in non-specialized shops with manufactured goods
- 1.4% in electrical goods and furniture stores
- 2.9% in mail order and internet retailing
The last of these, mail order and internet retailing accounts for 7% of retail sales.
The Breakdown of Sales
In July 2022, domestic retail sales totaled HUF 1,472 billion. Non-specialized and specialized food shops made up 47% of all of the month’s retail sales. Non-food retail made up 34%. Petrol stations’ retail trade made up 19%. Mail order and online sales accounted for 2.9%.
January to July
Calendar-adjusted data for January to July 2022 shows a 9.3% increase in sales. This period saw the following increases:
- 1.4% for food sales
- 11% for non-food sales
- 29.6% for motor fuel sales
What It Means
Just looking at the figures for sales in July only gives you so much information without context. Gergely Suppán, the Chief Analyst of Magyar Bankholding reported that the retail sales growth wasn’t as large as expected.
This indicates that some of the earlier benefits in the year have started to lose their effect on sales. For example, the major tax refund for parents seems to have had reduced effects by July.
The decrease in food sales was likely due to Hungarians eating out more instead of buying groceries to cook at home.
More analysis came from Péter Virovácz, a senior analyst at ING Bank. He said that the data shows that consumers were buying less due to climbing inflation. He warned that this trend could worsen due to fiscal tightening. He specifically pointed to the reduced eligibility for the sole proprietor’s tax and the restrictions on regulated utility prices.
As of fall, experts predicted that retail sales growth would slow. This prediction was based on the increased energy bills.
What About the Third Quarter?
It takes time to analyze various figures, which is why July’s data was released in September. Early data for the third quarter is out, as is early data for the beginning of the fourth quarter.
That early data from ING indicated the fourth quarter would be tough. Month-on-month, October saw a 3.5% decrease in industrial production volume. For reference, that was the worst monthly performance since the initial effects of COVID.
Despite this, year-on-year growth was still positive. There was a 5.1% increase in output.
Sales data provides insights into how Hungarians are coping with inflation and increased energy prices. People seemed to be adapting in the middle of the year, but the fourth quarter shows signs of being tougher.
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