Czech Retail Sales Drop for 15th Consecutive Month, but Pace Slows

Czech retail sales have dropped for the fifteenth consecutive month. In July, the year-on-year decline slowed to 1.8% from June’s 3.9% drop. However, sales rose slightly by 0.1% in a month-on-month comparison. Fuel sales increased, but sales for food items fell, according to data from the Czech Statistical Office (CSU) on Thursday.

Sales for food items fell by 4.2% compared to last July, while sales for non-food items fell by 3.6%. In contrast, customers spent 13.7% more year-on-year on fuel.

Sales for the sale and repair of motor vehicles were also higher year-on-year, rising by 4.9%. Sales in stores selling cosmetics and toiletries grew even more (+7.6%), and internet and mail-order shops also saw growth (+2%).

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 declines.

In a month-on-month comparison, sales for the sale and repair of motor vehicles rose by 1.1%. Sales for non-food items rose by 0.3%, while sales for food items stagnated, and sales for fuel fell by 0.8%, according to the statisticians.

Analysts: Consumer Demand Improving

“July’s retail numbers further confirm stabilization and slight recovery of consumer demand. However, it is a stabilization at very low levels. No other EU country has experienced such a deep drop in retail sales and household consumption as the Czech Republic in the last two years,” commented Miroslav Novák, an analyst at Akcenta.

Jakub Seidler, chief economist of the Czech Banking Association, also sees some improvement in consumer sentiment. “The month-on-month development was weaker compared to previous months, but based on the latest data, there is already a slight improvement in consumer demand, which will gradually improve sales in the second half of the year,” he said.

Novák expects retail sales to fall by around four percent, maybe even more, for this year. “At least consumer confidence begins to decrease in pessimism. Concerns about rising prices concerning slowing inflation are fading, and households are slightly less pessimistic about further economic development and their financial situation,” he added.

Seidler is more optimistic in his estimate. “For the whole of this year, retail is headed for a similar year-on-year decline as last year, at around 3.5%,” he stated.