HU: Retail sales further slowed in March

Volume of retail sales slowed faster than expected in March. Calendar-adjusted figures show a modest increase of just 0.4% y/y, down from the 3.2% y/y growth seen in February. The unadjusted yearly figure revealed a decline of 0.4%. Compared to February, the volume of sales dropped by 0.5%.

Among the three main branches, calendar-adjusted sales volumes increased by 1.2% y/y in food shops and by 5.9% y/y in non-food retail branches. Meanwhile, automotive fuel retailing rose by a mere 0.1% y/y in March.

The pleasant surprise at the beginning of the year appears to have been a one-off event, as we observe a continued slowdown in both February and March. In April, we anticipate some positive correction, supported by the longer weekends. Additionally, the increase in real wages and various administrative price reduction measures by the government may lead to more favorable data for the rest of the year. However, the trend seen in recent years may persist: households' consumption tends to shift from products towards services. This phenomenon may limit a more spectacular acceleration in retail sales volume.