The rapid rise in retail turnover in January followed by a drop

The substantial rise in retail turnover published a month ago was a pleasant surprise, amounting to close to 6%. Yet the January growth was primarily the result of short-term factors (e.g., lower heating bills of previous months because of warmer weather). That implied the possibility that February would witness a drop in sales volumes. This is exactly what has happened. The retail turnover in February (seasonally adjusted data at constant prices) dropped 2.2% month-on-month. The good news is that the drop was experienced in the non-food segment, whereas the sales of food items even increased by 0.8%. The other piece of good news is that the February drop has not "devoured" all of the January growth. If we compare the sales levels in February with those of last December, a substantial rise is still the case (+3.3%).

Year-on-year, significant growth (+10.0%) in the retail turnover has still been maintained.  However, the data on monthly change suggest that this is hardly owing to February developments: the growth was determined by a gradual increase over the course of the entire year.

The consumer confidence indicator for February-March yesterday published by the European Commission points to a similar dynamic of a rapid rise and drop. The impressive improvement in February (by 5.9 percentage points), which lifted the indicator to almost the level of that in the "years of plenty", was followed by a drop in March (by 6.5 percentage points). The drop was even sharper than the improvement observed earlier. That suggests that  it was indeed short-term factors that were decisive in the adjustments. Even if some of the population experienced a rise in confidence as a result of salary rises, the heating bills and real estate tax payment schedules nipped these shoots of optimism in the bud.