Retail Sales growth accelerates in Q2

Erste Bank Research Team Erste Bank

On the radar

Producer prices in Croatia declined by -3.0% y/y in July.
Industrial production in Hungary declined by 3.7% y/y, based on working-day adjusted data.
Today, Romanian central bank holds a rate setting meeting and we expect 25 basis points cut.
Hungarian central bank will release minutes from the last meeting.
In Serbia, producer prices will be published at noon CET.

Economic developments

Retail sales growth (average of monthly indicators of real growth) was stronger in the second quarter compared to the beginning of the year in most of the CEE countries. Only Croatia and Poland experienced slight deceleration of retail sales growth dynamics in the second quarter. In all other countries, the retail sector performed better. Compared to 2023, the improvement of the retail sector conditions is quite stunning, however. Last year, sector contracted everywhere apart from Croatia and Romania. So far in 2024 it grew at a very solid pace supported by improving purchasing power of households. It seems quite clear that private consumption is likely to remain a key growth driver in the second quarter of the year.

Market developments

Today, the Romanian central bank holds a rate setting meeting. Since the previous one, June inflation dropped further to 4.9% y/y. July inflation (due August 12) is likely to inch higher to 5.2% y/y mainly due fuel excise duty hike. Such development was included in the central bank’s forecast assumptions, however. Core inflation is expected to decline further in July. Thus, nothing really changed on the inflation front since the previous central bank meeting to halt the rate-cutting cycle. Hence, we expect the NBR to deliver another by 25bp to 6.50% vs market expectations of rates’ stability. The bond rally continues in the region as long-term rates keep moving north after quite substantial declines over last week. As far as currencies are concerned, EURCZK is above 25, EURHUF increased to 397 while EURPLN is at 4.30.

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Erste Bank Research Team

Erste Bank

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