In January-February, retail sales rose by an unadjusted 2.9 percent and an adjusted 2.5 percent. The economy ministry’s deputy state secretary for business affairs told public television that whereas retail sales had expanded at a more moderate pace in February, this came after 44 months of continuous growth. Zoltán Marczinkó said among the reasons for the slowdown was the especially high base.

In February last year retail sales grew by an exceptional annual rate of 7.6 percent. He added that for the rest of the year indicators such as employment, inflation and net wages all pointed in the direction of growth.

Analysts told MTI that the February data had underperformed not only the market consensus but also the most pessimistic prognoses fuelled by tensions on the labour market and rapidly growing real wages.

They also pointed to the high base as an explanation. Péter Virovácz of ING Bank noted that consumption had continued to grow nonetheless, but retail turnover had not been this sluggish since 2013. Moreover, weaker data had persisted since the start of 2016, suggesting a trend.

Dávid Németh of K and H Bank said the purchasing power of households had improved, but this had yet to translate into retail trade figures since more people were bumping up their savings and buying services, or else spending money on travelling abroad.

Republished with permission of Hungary Matters, MTI’s daily newsletter.