HU: Surprising increase in food shops in August

The August retail sales figures came as a slight positive surprise this morning. Volume of retail sales increased by 4.1% y/y in August, according to the calendar-adjusted statistics. The actual figure proved more favorable than our estimate of 2.8% y/y. It can be seen as a positive sign, as well that volume of retail sales increased relatively strongly, by 0.8% compared to July.

Among the main branches, the calendar-adjusted sales volumes increased by 7.5% y/y in food shop and by 2.9% y/y in non-food retail branches. As expected, automotive fuel retailing dropped by 1.2% y/y. All in all, the positive surprise was mainly due to the relevant increase in the turnover of food shops.

Considering all the factors, the recovery of sales may slowly continue, mainly as a result of a considerable - around 10% - increase in real wages. On the other hand, a more rapid growth of sales in shops is curbed by the increasing relevance of services: mainly due to private healthcare expenses. Nevertheless, improving households consumption should support the GDP in the coming quarters and contrary to 2023 - would be the most relevant GDP contributor this year. Conversely, the continued subdued performance of the industrial sector may weigh on export performance. We expect the economy to grow just by 1.4% annually in FY 2024.