Relatively weak retail sales data in December

HUNGARY - In Brief 03 Feb 2017 by Istvan Racz

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Retail sales rose by 3.2% yoy on calendar-adjusted basis in December, according to data published this morning. This means an average 3.4% yoy growth in Q4, down from 4.4% yoy growth in Q4, and also the weakest number since Q3 2014. Retail sales still expanded by 4.6% in full-year 2016, moderately down from 5.8% growth in 2015. All this is expressed in volume terms, of course.Today's number has provided further proof that growth was following a decelerating trend in Q4, despite official expectations that it should have picked up in late 2016. among others on robust consumer demand. We continue to expect moderately weaker consumption growth in Q4 than in the previous quarter, and also GDP growth to slow to 1.5% yoy, sda, from the 1.6% growth recorded in Q3. This would mean only 1.5% GDP growth for full-year 2016 on calendar-adjusted basis but probably no less than 2% growth on unadjusted basis. Such an outcome would be a disappointment for the MNB, which still expect 2.8%, but much less for analysts on the market who largely share our view, or expect may be a bit higher number on average. The first estimate of Q4 GDP is due on February 14, on the same date when the January CPI data is also to be released.