Hungary's retail sales growth slowed more than expected in January, official data showed on March 3, with retail sales rising 2.1% y/y versus the 4.5% y/y increase seen in December.

Retail sales in Hungary have been increasing since July 2013 on the back of rising consumer confidence, though the latest annual growth figure was the weakest in that period. Some slowdown had been expected from the high base of last year, which saw the introduction of online cash registers and faster growth of retail sales.

On an unadjusted basis, retail sales in January grew 1.6% versus 5% growth in December.

In food, drinks and tobacco stores, the volume of sales adjusted for calendar effects decreased by 1.5%, in which the high base effect played a role, the stats agency said. The turnover increased by 5.7% in non-food retail trade and by 4.4% in automotive fuel retailing.

Despite the weak January retail sales figures, analysts expect that rising employment and 6% net real wage growth will provide a strong base for household consumption this year. Consumer confidence rose in the third quarter to its strongest level in five years, according to a gauge by market researcher Nielsen.

"We maintain our expectation that retail sales might increase around 5% y/y in Hungary in 2016," predicted FX Street, which added that the strengthening of the overall economy might be reflected in an upgrade on March 4 from Moody’s Investors Service, which will publish its updated credit rating report on Hungary. The current rating is 'Ba1', which is just below investment grade, but the outlook is positive, which was modified in November. 

Meanwhile, in other data releases today Hungary's trade surplus for December was revised down slightly to €604mn from €643mn, final data showed.