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The economy

Most of the analysts were positively surprised by the revival of retail trade at the end of last year, and they expect even greater growth this year, due to the extraordinary rise in incomes and the low base at the beginning of last year.
 According to the latest report of the Central Statistical Office (KSH), the turnover of retail stores increased by 6.2 percent after adjusting for the calendar effect in December last year, by 6.7 percent according to raw data, and by 3.5 percent for the year as a whole - according to both raw and adjusted data . In December, the volume of sales adjusted for the calendar effect increased by 2.7 percent in food and food-type mixed stores, by 8.7 percent in non-food retail, and by 11.5 percent in fuel retail compared to the same period of the previous year.
Péter Virovácz, ING Bank's leading macroeconomic analyst, was surprised by the December performance of retail trade after the decline in November. He added that the surprise was clearly provided by the sale of fuel. Although the record of falling fuel prices predicted an increase in traffic, the ING Bank expert expected that the rebound would be much weaker.

In non-food retail, consumers postponed their purchases until December after a surprisingly weak November, when the expected big discounts were missed. According to the analyst, the fact that the November salary data also showed a significant increase in earnings may have contributed to the increase in turnover, which indicated not only a jump in regular but also one-off payments.

Therefore, the shopping fever moved from November to December, fueled by higher earnings, and the negative impact of the new wave of the coronavirus, which was more moderate than expected, helped retail trade at the end of the year - concluded Péter Virovácz. As he added, this also means that the GDP growth in the fourth quarter may be better than the market consensus so far and may show an annual growth of over 6 percent.
A significant role in the positive surprise was played by the fact that the KSH again made a significant revision of the previous data, emphasized János Nagy, Erste Bank's macroeconomic analyst. He found: in December, retail turnover finally exceeded its pre-epidemic peak. The data of the past months show that increased inflation can delay growth, he noted.

At the same time, the expansion is also supported by the low base of fuel trade, the effect of which will last until May. The negative effect resulting from the price increase can be offset on the one hand by the strong wage increase, and on the other hand by the large-scale government transfer package planned for the coming months, the Erste expert pointed out. The question is how much of this is used by households for consumption and savings. All in all, a dynamic expansion is expected from domestic trade this year as well, which can be the engine of the economy mainly in the first half of the year, he stated.
Gergely Suppan, Takarékbank's chief analyst, also exceeded the expectations of the December data. The increase in traffic after the gradual opening was supported by the full recovery of the labor market, as well as the dynamic increase in wages, the effect of which is at the same time dampened by the lingering inflation, he said.

This year, the low base at the beginning of last year, the reimbursement of childcare costs, the 13th monthly pension, as well as the six-month bonus planned for the police and professional staff - with which, in total, around HUF 1,200 billion in extra income can be brought to households - as well as the nearly 20 percent minimum wage and as a result of the increase in the minimum wage, Takarékbank's expert expects a double-digit growth of close to 11 percent in in retail circulation.

At the same time, purchases are hindered by the lack of spare parts for certain items, especially in the case of motor vehicles and certain technical and computer technology items -
added Gergely Suppan

"It was appropriate"

However, according to Gábor Regős, head of the macro-economics department of Századvég Gazdaságkutató, the significant increase in retail sales in December was in line with expectations. The increase in turnover was primarily due to high employment and the improving income situation, as well as the benefits paid to pensioners in November. Even in December, high inflation apparently did not hold back the turnover substantially - he noted.

He also highlighted as an important factor that last year's Christmas was not characterized by strict restrictions similar to the previous year, so households spent more, for example on gifts. Fuel traffic also increased significantly, which is partly explained by the opening hours of the accommodation facilities and partly by visits to relatives, but the larger passing traffic may also have played a role in it.