K&H Analyst Commentary: There is still room for expansion in Hungarian stores
Hungarian retail trade is expected to grow by nearly 3 percent this year, while next year it could grow by 3.5 percent.
There was a slight increase in retail trade in August. According to the data adjusted for calendar effects, the volume of turnover increased by 2.4 percent year-on-year, and compared to July – based on seasonally and calendar-adjusted data – it increased by 0.8 percent. Dávid Németh, K&H’s chief analyst, said about the data: “The annual growth was 2.3 percent for food and 2.2 percent for fuel. It is favorable that the growth in non-food products, which includes durable consumer goods, was much higher than average, almost 5 percent. There was an example of a similar growth in this product group in November last year, when the surplus was 4.3 percent. These figures indicate a recovery in household consumption, which is primarily due to the increase in real wages.
He added: “It is also good news that, based on long-term indicators, the volume of August turnover exceeded the 2021 monthly average by 2.4 percent, compared to the 1.6 percent increase in July. At the same time, the latest data falls short of the 3 percent increase in April. In other words, the previous accelerating dynamics have stopped in the past five months and more sideways movement and stabilization are visible. In other words, there is still room for expansion in Hungarian retail.”
According to the expert, an annual average growth of close to 3 percent can be expected in 2025. In 2026, the development of net real wages will also be the key issue in terms of retail performance. He said: “We still have to wait for next year’s wage agreement, but we are counting on a net real wage increase of around 5.5 percent in the private sector. Thus, retail turnover may pick up slightly, which projects an annual expansion of around 3.5 percent.”
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