The increase slowed from 6.2% in the previous month. Retail sales have risen for four consecutive months after eight months of decline, KSH said.

Adjusted food sales increased by 3.7% and non-food sales were up by 2.6%.

Vehicle fuel sales rose by 1.9%. In January-July, retail sales were up by a calendar-year-adjusted 2.1%, KSH said.

Commenting on the data, a government official said the Hungarian retail sector is starting to recover from pandemic-related lockdowns.

Péter Cseresnyés, a state secretary of the innovation and technology ministry, said that government measures resulting in 4.7 million jobholders, wages averaging above 400,000 forints (EUR 1,100) and higher minimum wages left money with Hungarians to spend on themselves.

Barring another strong wave of the pandemic, the current moderate growth is expected to reach pre-pandemic levels by the end of the year, he said.

Growing vaccine acceptance is key to that process too, he added.

ING Bank chief analyst Péter Virovácz said the modest rise in retail sales could be attributed to households’ preference to spend on services during the summer months.

ING is standing by its projection for full-year GDP growth of 7.7%, he added.

Takarékbank senior analyst Gergely Suppan also said consumers likely spent more on recreation during the month, but added that “dynamic” wage growth and a growth-linked year-end pensioners premium could boost retail turnover.

He put full-year retail sales growth around 3%.