Czech consumer boom continues but could be easing slightly

For quite a long time now the question has been posed when will the Czech consumer boom show signs that it is losing its legs. No time soon appears to be the reply from the latest set of retail sales figures out from June.

Photo: Tomáš Adamec

The June figures suggest Czechs’ love affair with shopping – the country is by some estimates reckoned to have the most supermarket space per capita of any country in Europe – is not dying down.

The latest figures show a 1.5 percent advance in the volume of retail sales, excluding cars, on May and a 6.2 percent rise on the same month in 2015. And the spending boom appears to apply across all sectors.

Particularly strong in June were sales of household items, information and communications equipment, and clothing and footwear. On the other hand, spending on foodstuffs and cultural and recreation goods represented a smaller share of overall spending.

And there is confirmation that the trend of Czechs changing their shopping habits with more purchases over the Internet and from mail order outlets than in person on the shop floor is continuing. The growth rate from Internet purchases this time round came in at 22.3 percent. For the whole of the second quarter, retail sales are 5.3 percent higher than the corresponding period in 2015. That compares with a figure of 6.1 percent for the first quarter.

Factoring in one of the biggest purchases for most Czechs, the acquisition of a new car, and there are still signs that domestic demand is still strong even after the latest July new car sales figures, which revealed the first monthly drop in year on year sales so far this year. The Czech Statistics Office still shows second quarter figures for sales and repair of cars, adjusted for calendar variations, running at a year on year rise of 9.4 percent.

Photo: Tomáš Adamec

And the biggest consumer market of all, the property market. Well that’s clearly booming as well with figures out this week showing both record number of home loan contracts signed by Czech banks in the first half of the year and a record total for the overall loan total.

Early first half profit figures out from Czech banks though show they are not celebrating that much from the booming loans market. They are complaining of low margins on their ongoing operations and would clearly welcome the chance to hike them up if possible.

And the Czech National Bank as well is clearly getting worried that lax lending policies from some lenders might be contributing to the creation of a Czech property bubble. As long as wages keep rising and unemployment keeps shrinking there are probably no major causes for concern, but a stutter on those fronts could spark worries and the shopping online and in store shopping baskets could start becoming a bit emptier.