New data on retail sales and prices: good news and bad news

HUNGARY - In Brief 03 Aug 2022 by Istvan Racz

New data reflects a decelerating trend of yoy retail sales growth, with +5.8% in June, after 8.4% in May, 9.8% in April and a peak 11.9% in March, the month immediately preceding the election and immediately following the EDBFGA (the Election-Driven Big Fiscal Give-Aways) of February. In effect, all this means that seasonally adjusted retail sales fell month-on-month in each of the last three months. This substantiates Mr. Virág's (MNB) recent words, based on the MNB's weekly activity index (WEAI), that from mid-June, GDP growth must have decelerated quite significantly. Bad news from the growth point of view, but obviously good news from the inflation perspective, as much of the current high and accelerating consumer inflation seems to have originated from domestic sources. Importantly, the yoy growth of retail fuel sales, included in retail sales total, decelerated to 23.6% in June, from 37.6% yoy in May, after the sales of fuel at administratively depressed prices to nonresidents and all trucks had been prohibited from May 27. But fuel sales still grew by 30% yoy in H1 this year. This explains a lot about why the government was forced to reduce eligibility to buy cheap fuels further from July 30, in view of an upcoming supply problem. The reason why fuel sales did not decelerate more sharply in June can be explained partly by a substantial post-Covid recovery of summer tourism, and partly by some hoarding, as customers believe less-and-less that the administrative price control of fuel can be maintained for much longer. But good news is that the unregulated retail price of fuel (falsely called as a 'market price' in official language) is moderately decreasing, as in...

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