Economy 6 July 2022, 9:27am

Here's one of the reasons behind Hungary's sky-high inflation, fuel shortages

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Retail sales in Hungary are growing strongly on an annual basis, with volumes remaining high, reflecting robust domestic demand. People are buying everything like hotcakes, fuel sales are soaring.

Retail sales grew by 11.1% in May 2022 compared to the same period last year, but failed to expand on a monthly basis. However, the latter is largely due to the cabinet's efforts to limit sales of capped-price fuel. Previously even foreigners came to fill up their tanks, which sent sales soaring in March.

The volume of sales increased by 3.0% in specialized and non-specialized food retailing.
The turnover of non-food retailing increased by a total of 9.5% in volume.
The volume of sales in automotive fuel stations increased by 37.5%, adjusted for calendar effects.

Thus, retail trade is showing a substantial growth, which is related to the fact that the income of the population is increasing substantially due to labour shortages, a 20% increase in minimum wages (which also has a substantial wage-increasing effect in other wage categories) and one-off government transfers (e.g. PIT refund). This allows companies to easily pass on cost increases in their prices. Inflation, which is rising and is expected to hit a new high in the coming months, will of course continue to erode real income growth, which will become increasingly painful for the population in the second half of the year.

Fuel sales showed the sharpest increase in May, which is partly due to the fact that everyone who can is trying to fill up their tanks in Hungary (fewer and fewer people can now because of restrictions) and the population is driving a lot, taking advantage of the reduced petrol prices. This, in addition to the fact that many people have left the domestic fuel wholesale market, has led to a temporary shortage of fuel at a number of petrol stations.

The volume of sales increased by 3.0% in specialized and non-specialized food retailing. The volume of sales increased by 2.4% in non-specialized food and beverages shops accounting for 75% of food retailing and by 3.7% in specialized food, beverage and tobacco stores.
The turnover of non-food retailing increased by a total of 9.5% in volume. Sales volumes rose by 54% in second-hand goods shops, by 35% in textiles, clothing and footwear shops, by 12% in pharmaceutical, medical goods and cosmetics shops, by 9.4% in books, computer equipment and other specialized stores, by 7.9% in non-specialized shops dealing in manufactured goods and by 1.1% furniture and electrical goods stores.
The volume of mail order and internet retailing accounting for 8.2% of all retail sales and involving a wide range of goods fell by 1.4%.