Polish retail sales grew 8.8% y/y in constant prices in November, statistics office GUS announced on December 19.

The reading marks a pick up in the pace of growth after turnover expanded 7.1% y/y in October. That affirms private consumption, fuelled by the tightening labour market, as the key driver of economic growth.

With industrial production growth also strong through the eleventh month of the year, the Polish economy continues to be in rude health and on course for a GDP growth of at least 4% y/y in the fourth quarter, according to analysts. Poland’s GDP accelerated to 5.2% y/y in the third quarter.

“The most dynamic sales growth came in the segment of durable goods, such as cars, domestic appliances, or furniture,” Bank Millennium noted.

“This suggests consumption growth has a fundamental character and remains the main driver of economic growth. Growing real incomes, high consumer confidence and negative real interest rates are conducive to consumption growth,” the bank said.

The retail sales and industrial production data together with data from the labour market could, in theory, provide the Monetary Policy Council with some food for thought about rising interest rates. Although a hike is not expected immediately, it is generally agreed it will come in the second half of 2018.

The growth in retail sales in November was broad, with all main segments experiencing expanding sales. Sales growth of food, drinks, and tobacco products came in at 3.2% y/y in November, while sales of fuel expanded 3.7% y/y. Sales of furniture and domestic appliances expanded 14.8% on the year, while retail trade in textiles, clothing, and shoes boomed 26.4% y/y in November.

In monthly terms, retail sales fell 1.9% in constant prices. In current prices, retail sales grew 10.2% y/y and fell 1.3% m/m.