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Consumer confidence, at its peak, supports retail

Company: Komerční banka, a.s.

The retail sales statistics for April indicated that the post-Easter mood and warm April weather attracted consumers to shop for household goods and clothing. The yoy retail sales dynamics also influenced the fact of two additional working days, which allowed households more time at stores.

Retail sales increased 5.6% in April. The growth was supported by calendar effects, when April had two more working days than a year ago. Retail sales were also reinforced by the warm weather. Additionally, domestic consumer confidence has increased to new record highs since the beginning of the year. Solid wage growth, muted inflation and record-low unemployment also play a role.

In comparison with last April, retail sales of non-food goods increased the most, nearly 13%. New houses, bought during the retail market boom in past years, require new equipment. Thus, the sales of furniture and household articles are flourishing. In comparison with a year ago, they grew 14%. April’s warm weather also attracted consumers for shopping. In real terms, apparel retailers sold 19% more while footwear sold even 20% more than a year ago.

In contrast, the fact that Easter was at the end of March instead of April like a year ago was reflected in the retail sales for food and beverages, which decreased 3.6% yoy. However, food retail sales increased significantly in March in the runup to Easter.

For the entire year, we expect an acceleration of retail sales dynamics. According to our outlook, retailers will improve their sales 7.3% on average. In particular, those selling expendable goods will profit from cooling apartment sales dynamics. This will furthermore reinforce retail sales growth as households will invest less in housing, turning their expenditures toward consumption goods. Thus, private consumption remains the main driver of economic growth over the coming period.

Tags: Economics | Finance |

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