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Thursday, July 24, 2008

Hungary Retail Sales Continue Their Decline In May

Hungarian retail sales fell for the 16th consecutive month in May as government measures to reduce the budget deficit continued to sap consumer spending, forcing in the process thousands of small businesses into closure. Retail sales fell an annual 1.6 percent, after a 1.5 percent decline in April, according to the Budapest-based statistics office.

One consequence of the ongoing decline in sales is that the number of retail outlets in Hungary fell by 3,173 at the end of 2007 to a 5-year low of 162,473 as the smallest shops are forced out of business, according to statistics office data.The number of stores owned by individual entrepreneurs fell by 2,896 last year to 62,794 at the end of December, the lowest since records were started in 1998.

The seasonally adjusted retail index now stands at 137.5, well down from the August 2006 high of 144.6. Given that Hungary now has a rapidly ageing and declining population I see no good reason why retail sales should ever reverse this downward trend (on a longer term basis, obviously there can be month on month rises), so it may well be that 2006 was the historic high point for Hungarian retail sales.

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