Retail sales recover in June – UPDATE

Retail sales in Hungary edged up by an annual 0.8 percent in June, recovering after declines in April and May, data released by the Central Statistical Office (KSH) on Wednesday show.

Retail sales had fallen by 10.2 percent in April while the country was under lockdown to contain the spread of the novel coronavirus. Retail sales improved in May, as restrictions were gradually lifted, but still dropped 2.8 percent.

Adjusted for calendar year effects, retail sales inched down 0.1 percent year-on-year in June.

Adjusted food sales dropped 1.5 percent, non-food sales rose by 4.9 percent and fuel sales fell by 10.9 percent.

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Sales of clothing and shoes were down just 14.2 percent, after plunging close to 90 percent during the lockdown. Sales of computers and peripherals increased by 17.2 percent, after declining in the previous three months. Sales in pharmacies slipped 3.5 percent, falling for the third month in a row after stockpiling lifted turnover more than 50 percent ahead of the lockdown. Online and mail-order sales were up 37.2 percent, showing a return to earlier growth levels after more than doubling during the lockdown.

In absolute terms, retail turnover came to 1,048 billion forints (EUR 3.03bn) in June.

For the period January-June, retail sales rose an adjusted and unadjusted 1.3 percent. Food sales were up 4.6 percent, non-food sales increased by 2.1 percent and vehicle fuel sales dropped 11.3 percent.

Commenting on the data, Péter Cseresnyés, the Innovation and Technology Ministry’s state secretary for trade policy and consumer protection, said that thanks to the government’s economic measures, Hungary’s retail sector was in a position to close out the year strong.

Whereas last year it took until April for retail turnover to exceed 1,000 billion forints, this year turnover already exceeded 1,000 billion in March before taking a hit due to the novel coronavirus epidemic in April, Cseresnyés said.

The decline in retail sales slowed in May and trade recovered in June to exceed the figures from the same period last year, the state secretary added.

The data show that the government’s measures are aiding economic recovery, Cseresnyés said, adding that if the status of the epidemic in Hungary remains as is then neither the retail sector nor the economy would be encountering significant challenges over the coming period.

ING Bank senior analyst Péter Virovácz said the recovery in the retail sector is slower than expected. The dramatic rise in the price of fresh fruit and vegetables could be holding back food sales, and Hungarians are less inclined to travel which has cut into fuel sales, he added. He said the expiration of wage subsidies for people working reduced hours in the autumn could reduce incomes and cause retail sales to fall again.

Takarékbank chief analyst Gergely Suppán said the recovery in retail sales is supported by the return of more people to work as well as a bonus for health-care professionals paid in June. He augured a full-year retail sales rise of 1.2-1.5 percent.