At its June meeting, the Monetary Council of the central bank continued to cut both the policy rate and the base rate, as it had done in the previous month. As a result, the base rate (and the policy rate) in Hungary is currently at 7.0%, after a 25 basis point cut.
In April, retail sales increased by 3.2% year on year on both a raw and calendar-adjusted basis. Within this, compared to the same period of the previous year, sales increased by 3.6% in specialised and non-specialised food shops, 4.3% in non-food retailing and 2.0% in automotive fuel retailing.
The monthly value of the SZIGMA CI indicator, which provides feedback on the current state of the Hungarian economy, was 0.082 up to May 2024. This is an improvement on the previous month’s index value of 0.072. This means that the Hungarian economy is still growing at a rate above its historical trend rate.
The other indicator, SZIGMA LEAD, a short-term indicator for the future of the Hungarian economy, forecasts above-trend growth by the end of the forecast horizon. This is an improvement from the previous month’s forecast of below-trend growth at the end of the forecast horizon. So the slowdown in the growth rate of the Hungarian economy has turned into a stagnation.
In May 2024, consumer prices rose by 4.0% on average year on year.
Retail sales volume increased by 3.2% in April
In April, retail sales increased by 3.2% year on year on both a raw and calendar-adjusted basis compared to the respective period of the previous year. January saw the first annualised increase in a long time, and the trend continued in the following months, including April. This steady positive result already marks a reversal of the trend after the downturn in 2023. Consumption is expected to expand further in the coming months as real wages rise and consumer confidence strengthens.
In April 2024, turnover in specialised and non-specialised food shops increased by 3.6%, and the turnover in non-food shops increased by 4.3%. In fuel retail, turnover volumes increased by 2.0% in April compared to the previous year, mainly due to the abolition of the price cap on fuels in January of the previous year, after the weak results of the previous period, so this year’s volume is now compared to the declining volume.
In food retailing, sales volumes increased by 4.4% for specialised and non-specialised food retailing, while the volume in specialised food, beverage and tobacco stores rose by 1.8%, continuing the positive trend since February.
In non-food retailing, the volume of furniture and electrical goods fell by 1.8%, while the turnover of books, newspapers and stationery fell by 14.6% compared to the same period last year. April saw significant changes, with all but the two categories mentioned above showing increases. For example, the turnover of clothing and footwear, which fell by 2.8% in March, is now up by 7.7%. Sales volumes of pharmaceuticals and medicinal products also fell in March, but rose by 1.5% in April. In addition, sales of non-food products and second-hand goods increased by 5.0%, in contrast to the previous months, which showed a decrease.
The SZIGMA (abbreviation of the Hungarian name “Századvég Index a Gazdasági Momentum Alakulásáról”, in English: Századvég Index of the Development of Economic Momentum) is a simultaneous and preliminary indicator system developed by Századvég for the Hungarian economy.
It is crucial for economic policymakers and analysts to have an accurate picture of the state of the economy, but statistical data are often available with considerable delays. In contrast, the SZIGMA indicators provide information on the economic cycle and the business cycle within 30 days of the reference month, on a monthly basis.
The indicator system consists of two indicators, the SIGMA CI, which summarises the current state of the economy, i.e. information extracted from simultaneous variables, and the SIGMA LEAD, which provides preliminary information on the expected economic trajectory. A positive CI index means that economic growth is above the historical trend, and a negative CI index means that growth is below the historical trend. The SIGMA LEAD indicator provides a short-term forecast for a 9-month period. If the SIGMA LEAD indicator is positive, growth is expected to be above trend in 9 months’ time (i.e. three quarters of a year later), while if it is negative, growth is expected to be below trend in the near future.
