Czech retail sales have continued their downward trend, marking the fifteenth consecutive month of decline. In July, the year-on-year drop slowed to 1.8%, compared to June’s 3.9% decline. However, there was a slight month-on-month increase of 0.1%. The data was reported by the Czech Statistical Office (CSU), revealing that while fuel sales increased, food sales saw a decline.

Compared to July of the previous year, food sales fell by 4.2%, and non-food item sales decreased by 3.6%. Conversely, spending on fuel increased by 13.7% year-on-year. Sales in the motor vehicle sale and repair sector also experienced year-on-year growth, rising by 4.9%. Additionally, cosmetics and toiletries stores saw sales increase by 7.6%, and internet and mail-order shops reported growth of 2%.

On the other hand, specialty stores for household items (-9.7%), clothing and footwear (-6.2%), computer and communication equipment (-5.4%), and cultural, sports, and recreational products (-0.7%) all saw year-on-year declines.

In terms of month-on-month comparisons, motor vehicle sale and repair sales increased by 1.1%, non-food item sales rose by 0.3%, food item sales remained stagnant, and fuel sales decreased by 0.8%, according to CSU data.

While the data does show a slight improvement in consumer sentiment, analysts emphasize that the stabilization is occurring at very low levels. Czechia has experienced one of the most significant drops in retail sales and household consumption among EU countries over the past two years.

Miroslav Novák, an analyst at Akcenta, expects retail sales to fall by around 4% or even more for the year. He notes that consumer confidence is beginning to decrease pessimism, with concerns about rising prices and slowing inflation fading, and households becoming slightly less pessimistic about economic development and their financial situations.

Jakub Seidler, chief economist of the Czech Banking Association, shares a more optimistic estimate, predicting that retail will experience a similar year-on-year decline as the previous year, around 3.5% for the whole of 2023.

Article by Prague Forum