Recent retail sales data from Czechia indicates that household spending is driving the Czech economy, according to analysts at ING.
Retail sales rose 4.4% in June 2024, compared to a year earlier, a better than expected performance, with this increased household consumption being a “major driving force” of GDP expansion, according to David Havrlant, ING chief economist, Czech Republic.
In June, Czech retail sales excluding motor vehicles increased by 0.7% month-on-month in real terms. Non-food goods rose by 1.6% on a month-on-month basis, and fuel sales grew by 1.0%, while food sales fell by 0.8%. Annually, real retail sales in June increased by 4.4%, with non-food goods up by 6.4% YoY, and fuel and food sales each rising by 2.5% compared to the previous year.
This marks the seventh consecutive month of annual retail sales growth, driven primarily by online sales, ING said.
Household consumption
“The retail sales reading in June suggests that household consumption was a major driving force in 2Q GDP growth and is expected to contribute positively to overall economic activity in the coming quarters,” Havrlant added. “During a buoyant economic expansion between 2016 and 2019 with average GDP growth of 3.5%, we saw real retail sales gain 4.7% each year on average. The 2Q average increase of 4.5% in retail sales shows that consumers have done a pretty good job in recent months, benefiting from lofty real wage growth.”
At the same time, Havrlant noted that consumer sentiment has been on a downward trend since May, and took another hit in July, which is “casting a shadow” over third-quarter consumption performance.
Czech Statistical Office
Commenting on the improvement in retail sales in Czechia in June, Jana Gotvaldová, head of the trade, transport, and services statistics unit of the Czech Statistical Office (CZSO), said, “Sales in retail trade adjusted for price effects continued to grow, year-on-year, for the seventh successive month. Sales increased in the following: sale of food, non-food goods, and automotive fuel.
“The highest increase of sales was in retail sale via mail order houses or via Internet and in retail sale of cosmetic and personal care articles in specialised stores.”
