Consumer Confidence Grows Despite Decreasing Inflation
Retail Experts Expect Slow Recovery in Consumption
The coming months are expected to be closely observed by retailers, as December typically sees higher sales at the end of the year while January is important for growth trajectory, say experts. According to a report by World Economy, there is potential for real wages to continue rising, which could slowly but surely support a recovery in consumption. However, at the moment, Hungarians are primarily focused on paying off loans and building up reserves.
In November, the volume of retail sales fell by 5.4 percent year-on-year in both raw and calendar-adjusted data, and by 0.8 percent year-on-year in November. Despite these decreases, there has been no significant change in the structure of retail trade, according to expert analysis.
Péter Virovácz, a senior analyst at ING Bank, pointed out that while signs are encouraging for food sales, there is little sign of explosive growth in food consumption. However, some segments, such as furniture and specialty stores, which had been struggling, saw a significant upturn in November, with a 4.5 percent month-on-month increase, while textiles, clothing, and footwear grew by 9.2 percent.
On the other hand, total non-food retail sales volumes are still below the 2021 performance level, indicating a positive change but a large lag compared to previous data. Gábor Regős, chief economist at Makronóm, shared a similarly cautious view, noting that the recovery in retail sales is also being helped by the fall in lending rates, but this is also a slow process.
Overall, experts believe that the effects of rising purchasing power in the real economy are likely to see a slow, gradual reflection in the 2024 retail sales data. For now, it seems that a lasting recovery in consumption is contingent on the restoration of consumer confidence, which entails a longer process. Therefore, while there is optimism in the air, it will still take time for the full impact of these changes to be felt in the retail industry.
