Magazine: GfK Hungária Market Research Institute forecasts growth for 2018

According to Ákos Kozák, managing director of GfK Hungária, Hungarian FMCG sales and consumption have been growing continuously since 2015. The 3-4 percent consumption growth and the 4-5 percent expansion in retail sales were promising signs ahead of 2017 and the optimism was justified by last year’s retail performance.Besides other factors, the engine of the growth was that the salaries of Hungarian workers had increased. The average salary reached HUF 323,000 in Hungary. However, Mr Kozák called attention to the fact that Hungarian salaries are still much lower than the average of the European Union.

Taking a look at other countries in the region, we can see that the markets in Poland and Romania have been growing much more dynamically than in Hungary. Within the European Union Hungary belongs to the group of countries where consumption growth is smaller than the GDP increase. Still, we can be happy about the rising consumption level, added Mr Kozák, especially if we consider that even now that the personal income tax is low and the salaries are increasing, a primary school teacher in Austria still earns much more than in Hungary.

GfK Hungária’s managing director opines that the parliamentary elections in April will have great influence on the 2018 performance of the sector. Events like this generally result in lower consumer confidence. It is a common phenomenon that with the elections approaching, sales are going up if the majority of voters back the governing party – and in Hungary this is the situation at the moment. It can happen that this year’s sales growth will be smaller than 3.5-4 percent, but it can also climb up to 4-5 percent. At this time of the year it isn’t the numbers that matter but the trend.

Ákos Kozák also shed light on the misconception that in wealthier parts of the country consumers spend more on groceries. Statistical data show that the bigger purchasing power one has, the smaller proportion of their income they spend on food. When salaries are growing, consumers who belong to the lower four decimals in terms of income convert this salary growth. Those higher on the list start paying back their loans, and they will definitely start buying more goods, especially food products. They will start purchasing more prestigious brands or more products from the branded product they usually buy.

Mr Kozák told about the recent VAT cuts in certain food product categories that the trend is positive and it can have a beneficial effect on the given categories, but consumption in general won’t grow because of this – for that a VAT cut would be necessary in all categories. He thinks that the salary increases of recent months stem from the fact that there is a workforce shortage, but they also have to do with the government’s efforts. Workers still earn much more in Slovakia than in Hungary and the purchasing power of consumers is now bigger at our northern neighbour than in the Czech Republic! As for the current situation in Hungary, it seems at the moment that the average consumer is in a good position, while companies need to cope with extra burdens. //

Ákos Kozák
director
GfK