Hungary's retail sales figures for April are disappointing and show Hungarian consumers are exercising caution in spite of tax cuts, analysts said on Friday.
Calendar year-adjusted retail sales fell 1.3% year-on-year in April, accelerating from a 0.9% decline in March, the Central Statistics Office (KSH) said Friday morning.
Takarékbank’s Gergely Suppan said changes to the personal income tax system from the start of the year that left many Hungarians with more disposable income have done little to boost retail sales as consumers opt to make savings with their extra money.
Consumer confidence has been on the decline over the past several months because of the slow pace of recovery on the labor market, the anticipation of government measures and the strong Swiss franc, he added.
Much of Hungary's retail lending stock is denominated in Swiss francs.
Consumers could start buying more from August, when real yields on the assets of former private pension fund members are paid out, but continued weak consumption is an increasing risk to growth, he said. The option of foreign-currency loan borrowers to temporary choosing a fixed exchange rate could marginally boost 2011 consumption growth, Suppan said.
Zoltán Árokszállási of Erste said the April data were a negative surprise considering expectations of a 0.2% year-on-year increase in retail sales.
Personal income tax changes have had little effect on consumer demand, but the payout of real yields on private pension assets could give the market a one-off boost, he added.