OKSZ commentary on May retail sales data has arrived

Margin cap boost was short-lived

The OKSZ assessment highlights that the retail sales uptick observed in April—barely measurable in economic terms—was only a short-lived phenomenon. By May, consumer demand had already returned to the sub-3% year-on-year range, similar to what was seen in February and March amid rising inflation and growing uncertainty driven by government intervention.

Tamás Kozák explained that demand for margin-capped products is “price-inelastic”—in other words, it does not rise significantly even when prices fall—and these goods cannot be stockpiled, so any initial spike in purchases is quickly followed by reduced consumption. The government’s indecisiveness regarding the planned end of the margin cap in late May only added to consumer hesitancy, and the expected “last chance to shop cheaply” sentiment failed to materialize.

Negative effects increasingly apparent

The real cost of the margin cap is now becoming more tangible:

• Supplier price pressure is intensifying, and retailers are unable to absorb these increases on their own. OKSZ emphasizes that curbing inflation requires coordinated action across the entire supply chain.

• Investments in the retail sector are falling well below previous levels, and this trend is worsened by the government’s market-hostile proposal to tighten the mall construction ban, which further discourages capital expenditure.

Household consumption could drive growth—but policy is stifling it

OKSZ points out that as industrial production and capital investment decline, and agriculture suffers from severe drought damage, household consumption could be the only real driver of GDP growth. However, this potential is being undermined by the special retail tax, the 31.5% VAT burden, and consumer uncertainty fueled by erratic government measures.

The association calls for a more stable and predictable policy environment for the retail sector and urges a shift away from anti-market, short-term interventions, especially if boosting domestic consumption remains a goal of economic policy.