K&H Analyst Commentary: Retail awaits greater momentum

In May this year, the volume of retail sales, i.e. quantitative sales, increased by only 2.1 percent on an annual basis, according to data adjusted for the calendar effect. Based on seasonally and calendar adjusted data, retail sales decreased by 1.3 percent
compared to April.

“Although the May data was weak, this did not break the recovery trend in retail sales volume that has been going on since the end of 2023. At the same time, it is clear that the annual dynamics of around 4 percent are the top of the retail sales growth for now,”

said Dávid Németh, K&H’s chief analyst, evaluating the data. The unfavorable data in May is primarily due to the subdued turnover of food and general stores. Their annual growth was only 0.5 percent, the last time a weaker figure was recorded was in January 2024, a year and a half ago, when the decrease was 0.4 percent. The expert added:

“The detailed data also shows that there are store types that experienced spectacular growth in May and the first five months of this year. These include stores selling perfumes, industrial goods, furniture and technical goods.”

According to Dávid Németh, this year the volume of retail sales could increase by nearly 4 percent compared to the whole of last year, primarily due to the increase in real wages. According to the analyst, a greater momentum can be expected if households’ willingness to consume improves significantly, but according to the current outlook, there is little chance of this for now.