I. Structure and Level of Income of Hungarian Residents
Calculated on the basis of the income of a full-time employee, the average monthly salary per capita in Hungary was HUF 185,000 (US$1,006) in 2007, and HUF 198,900 and 199,800 (US$1,158 and US$988) in 2008 and 2009, with a year-on-year increases of 7.5% and 0.5%, respectively.
II. Structure and level of household consumption in Hungary
The EU divides household consumption into 12 categories in accordance with the international methodology: food and non-alcoholic beverages, tobacco and alcohol, clothing and footwear, energy such as water and electricity for domestic use, furniture and routine household maintenance, health care, transportation, communication, recreation and culture, education, catering and hotels, other products and services.
In 2007, final consumption expenditure of Hungarian households amounted to 40.611 billion dollars, up 0.6% year-on-year, accounting for 66.5% of the GDP ratio. Final consumption expenditure per capita amounted to 706,000 HUF (about 3,840.5 US dollars at the exchange rate of that year, or 4,039 US dollars at the constant prices of 2000), a decrease of 2.9% year-on-year, and an increase of 8% in prices during the same period.The increase in per capita consumption of Hungarian residents in 2007 compared with that of 2000 amounted to 84.3%.
The structure of consumption expenditure in the period from 2000 to 2007 changed as follows:
1.
1. Consumption of food and non-alcoholic beverages fell by 6 percentage points in the period 2002-2005, then began to recover in 2006, and by 2007 this category of consumer goods accounted for 23.7% of the total consumption expenditure of the population.
2. The proportion of consumer spending on clothing tended to decline overall. in 2007, the proportion of consumer spending on clothing fell to 2.9%, and footwear fell to 1.3%.
3. Since 2001, the proportion of consumer spending on housing and utility fuels has continued to grow, accounting for more than 21%, second only to consumer spending on food.
4. The proportion of consumer spending on health care has grown. 2.5% of total consumer spending in 2000 was 3.4% in 2007. 68.6% of consumer spending on health care was spent on pharmaceuticals, with pharmaceutical spending increasing by nearly 8% between 2000 and 2007. Meanwhile dental spending fell, to just 2,656 forints (about $14.5) per capita in 2007.
5. In transportation and communication consumption, the share of consumption on transportation services has grown significantly, with rail transportation as a share of transportation decreasing from 4.4 percent to 3 percent in 2000-2007, while road transportation increased from 7.5 percent to 14.3 percent.
6. The share of postal service consumption in telecommunication consumption expenditures declined, while telephone and other telecommunication service consumption expenditures rose.
7. Consumption in hotels and restaurants has been increasing year by year and accounted for 3.5% of total consumption expenditure by 2007.
(i) Food Consumption
Food consumption is the largest consumption item in the household, and this item refers to purely intra-household food consumption excluding consumption in restaurants and business or school canteens. in 2007, per capita food consumption was HUF 153,000 (about US$832), and per capita consumption of non-alcoholic beverages was HUF 14,000 (about US$76), accounting for 24% of total household consumption expenditure. In 2007, the increase in producer and foreign trade prices led to a 12.8% increase in consumer prices, which exceeded the average price increase. Food consumption declined by 4.1 percent year-on-year, with the decline attributed to higher consumer prices and changes in people's lifestyles.
During the period 2000-2007, with the gradual improvement of people's living standards and changes in consumption patterns, home-made food products continued to decrease, falling from 20.8% in 2000 to 11.7% in 2007. Expenditures on fast food, restaurant meals, and meals in corporate or school cafeterias increased continuously, with per capita consumption expenditures in this category reaching HUF 22,500 (about US$ 122) in 2007, a 21% increase from 2000. Due to the rapid development of the fast food industry and restaurants and their low-cost advantages, spending on meals in business or school cafeterias has also continued to decline.
In recent years, the structure of household food consumption is also changing, people pay more attention to a healthy and nutritious diet structure rich in animal fat food consumption has decreased significantly, cooking oil consumption basically stabilized at an annual per capita consumption of 10 kilograms of sugar and cereal consumption tends to decrease. Consumption of bread has declined significantly, meat consumption has stagnated, pork consumption has declined slightly and consumption of meat products has increased. Compared to other European countries, the proportion of milk, fish, vegetables and fruit consumed in Hungary is very low and continues to decrease. Food consumption of low-income households is more sensitive to price changes, and if the price of some foods exceeds the expected level, they choose less expensive alternatives.
In all categories of food consumption, per capita consumption is higher in the high-income group than in the low-income group, and only bread and dry legumes are lower than in the low-income group. The biggest difference in the quantity consumed is in cheese consumption, with a difference of more than 3.5 times between the poor and rich groups. There is also a significant gap between the rich and poor in the consumption of vegetables and fruits, which are closely related to health. It is worth noting that the population of high-income households tends to be lower than the population of low-income households, which implies that low-income households have a heavier burden of food consumption and spend a higher proportion on food consumption.
(ii) Consumption of water, electricity and other energy for daily life
Expenditure on the consumption of water, electricity and other energy for daily life is the second largest consumption item of Hungarian households. In recent years this expenditure has increased significantly, and in 2007 per capita expenditure on housing, water, electricity, gas and other fuels amounted to 148,600 HUF (about 808 US dollars), which is more than double the amount in 2000. Household energy consumption accounted for the largest share, 91,000 forints (about US$495) per capita, accounting for more than 60 percent of spending on water and electrical items in daily life and 13 percent of total household consumption spending.
(iii) Consumer durables
Household spending on consumer durables has been growing steadily since 1990, with the Western European way of consumption gradually being accepted by Hungarians. The constant emergence of trendy consumer durables (household appliances and electronic equipment) has contributed to the expansion of the Hungarian consumer durables market. The prices of consumer durables vary considerably, and cheap durable products produced on a large scale are particularly popular on the market. Televisions have been popular in Hungary for a long time, 98.7% of households have color TVs, most of them have more than one TV set, 8% of households have camcorders, 64% of households with children have DVD players, 48% of households have audio equipment, and 31% of households own digital cameras. Consumption of personal computers has grown, with 43% of households having a personal computer and 6% having a laptop in 2007. Consumption of cell phones is growing rapidly, with 27% of households using cell phones in 2000 and an average of 166 cell phones per 100 households in 2007. 49.7% of households own small cars.
Third, Hungary's consumption habits and the EU comparison
For the sake of comparison, the EU has unified the use of the PPS unit (purchasing power standards) as the unit of measurement of the consumption power, which refers to the ability of the residents of different countries to purchase products and services within a certain period of time, and filters out the influence of the differences in the price levels of different countries and the exchange rate. In 2005, the average household consumption in the EU-27 was 24,667 PPS, while in Hungary it was 10,694 PPS, which is 43% of the EU average and 37% of the EU-15 average. Romania has the lowest level of household consumption at only 5,324 PPS, and Luxembourg is the richest country in the EU with an average household consumption expenditure of 51,932 PPS. average household consumption expenditure in the newly admitted Central and Eastern European countries is less than half of the average of the old EU member states.
(I) Comparison of Annual Consumption Expenditures on a Per Consumption Unit Basis
In order to eliminate the differences caused by the different composition of household members, the EU has adopted the practice of giving a score of 1.0 to the first adult in a household (14 years old or older), 0.5 to the other members, and 0.3 for those younger than 14 years old, with a single score being a consumption unit. By way of comparison, the annual consumption expenditure per consumption unit in 2005 was 6241 PPS in Hungary and 15225 PPS on average in the EU27, which makes Hungary equivalent to 41% of the EU27 average and 35% of the average of the old member states (17825 PPS). Comparing the two methods of consumption per household and on the basis of each consumption unit, there is basically no difference in the ranking of consumption levels of the EU member states, with Hungary ranking in the bottom six of all 27 member states, Romania, with 2866 PPS, ranking last, and Luxembourg in first place with 32,794 PPS, with a difference of more than eleven times with Romania, which is in the last place. Among the newly admitted Central and Eastern European countries only Slovenia with 13299PPS exceeds the old EU member country Portugal with 11674PPS.
(ii) Comparison of Household Consumption in Different Age Groups
Whether the old or new EU countries members perform the same thing is that with the upper limit of the retirement age of 60 years old, the consumption capacity grows with the age, i.e., the age group of 45-59 years old Households have the strongest spending power. However, in recent years, due to the advancement of the retirement age, the awareness of this age group to save for retirement has increased, and thus the consumption capacity has declined and appeared to be lower than the consumption capacity of the 30-44 year olds. the largest decline in consumption of the 60+ age group is in Romania (47%) and Cyprus (44%), the smallest decline is in Sweden (10%), and the Hungarian consumption of this group has declined by 34%. The decline is 34%. The gap in consumption power between different age groups up to 60 years old is not very large in Hungary, with the consumption power of the 30-44 age group being 9.1% higher than that of the under-30 age group, and that of the 45-59 age group being 7.1% higher than that of the under-30 age group, compared to 31.5% and 39% respectively in the EU27.
(C) Comparison of Household Consumption Structure in EU Member States
Due to different economic and cultural development and lifestyles, there are large differences in the household consumption structure of EU countries. The largest consumption item for households in the EU27 is housing and domestic energy, accounting for 28.2% of the total consumption expenditure, followed by food and non-alcoholic beverages at 14.6%, and the third largest consumption expenditure item is transportation at 12.5%. These three consumption expenditures are also the top three expenditures of Hungarian households' consumption, only in a different order: the first major category is food and non-alcoholic beverages expenditures at 22.6%, the second is housing and energy for living at 19.4%, and the third major category is transportation at 14.1% (exceeding the EU average share). According to the Engel theory, the share of food and non-alcoholic beverages is inversely proportional to the standard of living, and the poorer the country, the higher the share of this type of consumption expenditure of the population. Luxembourg has the smallest share of food consumption expenditure in the EU at 9.3%, followed by the UK at 9.9%. Romania and Latvia have the highest shares of such consumption expenditure, at 44.2% and 33.8% respectively. Eating in restaurants is included in the catering and hotels category, with the EU share of such consumption expenditure at 5.7%, with Romania having the lowest share at 1.1%, Portugal the highest at 10.8%, and Hungary about half the EU average. The share of this type of consumption is generally higher in the Southern European region, which may be related to lifestyles.
In the main categories of consumer spending, Hungary and the old EU countries have roughly the same share of consumption in the two main categories of food and housing, both at 42%. The share of transportation consumption is also roughly the same, but Hungary has the highest share of communication consumption expenditure in the EU at 6.5%, more than twice the EU average share. In addition, the share of tobacco and alcohol consumption in Hungary exceeds that of older EU countries, but the shares of consumption expenditure on clothing and footwear, furniture, housing and routine maintenance are also lower than the EU average. The share of consumption expenditure on restaurant meals and hotels is also lower in Hungary than in the EU. Consumption expenditure on culture and recreation is proportional to the national standard of living, e.g. the share of such household consumption expenditure is 12.6% in Austria and 13.3% in Sweden. In Hungary, it is 8.5%.
Another factor affecting the structure of household consumption is the national financial system, for example, Sweden has a free education system, families pay almost nothing for education. Cyprus, on the other hand, has a high cost of education, accounting for 4% of household consumption expenditure, which is four times the EU average. A country's healthcare and insurance system has just as important an impact on the share of household consumption expenditure on healthcare.
Four, the characteristics of Hungarian household consumption
1, consumer behavior: Hungarian consumers in consumption, between price and product quality, generally focus on price, only a small percentage of consumers focus on product quality. Therefore, the development of after-sales service of Hungarian products is relatively lagging behind.
2. Consumer purchasing power is weak. Most of the consumers live in urgent need before the purchase behavior, the purchasing power is relatively concentrated in a small number of wealthy families. Hungarian consumers generally like national products.
3. Consumers are more dependent on consumer loans. The average consumer loan of Hungarian families is 1791 euros, and the loan is mainly used for the purchase of durable consumer goods such as household appliances.
V. Impact of Financial Crisis on Hungarian Household Consumption
According to the data released by the Hungarian National Statistical Office (HNSO), Hungary's domestic retail sales amounted to HUF 7,279 billion in 2009 (about 36 billion U.S. dollars), a year-on-year decline of 5.2%. Retail sales of food, beverages and tobacco declined by 3.8% year-on-year, while retail sales of non-food items declined by 8.7% year-on-year, of which retail sales of textile, clothing and footwear fell by 4.1% year-on-year, furniture and other household durables declined by 13.5% year-on-year, pharmaceutical products declined by 2.8% year-on-year, cosmetics increased by 5.8% year-on-year, and automotive fuel was basically unchanged from the previous year. Due to the tightening of Hungarian credit policy, the scale of consumer loans was greatly affected, and automobile sales fell 41.3% year-on-year.
The above data show that the financial crisis has a significant impact on Hungarian household consumer spending, the economic downturn has led to a decline in household consumption in Hungary, and to make the characteristics of household consumption more prominent. According to the Hungarian Institute of Economic Research GKI predicts that the Hungarian economy will touch the bottom of the crisis in 2010 and begin to develop gently, but by the high unemployment rate and credit tightening policies and other factors, the prospects for household consumption is still not optimistic.