Dip in Czech retail sales unlikely to last long

Czech real retail sales excluding automotive rose by 2.5% year-on-year in July, yet fell 0.3% on a month-on-month basis. Sales of motor vehicles and repairs gained 4.8% YoY and 1.5% MoM. On a monthly basis, non-food goods sales lost 0.4%, food sales 0.2%, while fuel sales remained unchanged. In annual terms, sales of fuels added 8.3% and of non-food goods 3.5%, while food sales declined by 0.9%.

Sales in specialised food stores dropped by 1.4% YoY. In non-specialised stores with food as the primary commodity, sales declined by 0.9% YoY in July. Meanwhile, sales gained 7.9% YoY in non-specialised stores with predominantly non-food products, and sales in online stores added 6.7% YoY.

For now, we attribute the noticeably different annual dynamics in food segment stores and non-food segment stores to the holiday effect, where households tend to spend less on Czech food products because of holidays spent abroad. July’s annual growth figure is also affected by a noticeable upward revision to July 2024's datapoint.

When examining WDSA levels, real retail sales have been stagnant since April, which is not encouraging news. Nevertheless, the resources for spending are gaining solid ground, as both nominal and real wages continue to increase at a solid pace. So, we see this as a largo intermezzo following a molto vivace spending pace over the first quarter of the year. A broadly similar pattern can be observed in previous years, and we expect retail sales data to show that households have been pushing the spending gas pedal from September onward.

Overall, the notable upward revision to last July’s data weighed on the annual pace of real retail sales. For now, the latest dip appears linked to subdued holiday spending, coupled with a pause ahead of the anticipated autumn spending rebound.