Strong domestic consumption to support Hungary's GDP in the coming quarters

Data released by Hungary's Central Statistics Office (KSH) on Wednesday showed that Hungary's calendar-adjusted retail sales rose by an annual 4.2 percent in March after a revised 6.6 percent annual growth in February.

Details showed that non-food products were the main driver of the growth. March food sales grew by an annual 1.9 percent, non-food sales were up by 7.6 percent, while fuel sales were 5.0 percent higher year-on-year.

Strong household consumption supported by the net real wage growth boosts the economy and it may remain one of the main components of GDP growth in the following quarters as well, because the relative level of the households consumption is still well below the equilibrium level compared to the real income.

"The relatively strong consumption supports the slightly more hawkish attitude of the NBH, so we maintain our view that the Monetary Council may moderate the base rate by ‘just’ 15bp in May, which might be followed by maximum one more cut in June." said KBC in a report.