Polish retail sales grew 7.4% y/y at constant prices in May, the statistics office GUS announced on June 20.

The reading marks a pick-up in the pace of growth of retail sales over the 6.4% annual growth seen in April. It also shows that consumption, fueled by the tightening labour market, continues to be a major driver of economic growth. Coupled with industrial production growth returning to a robust expansion pace in the fifth month, the Polish economy seems poised for another good quarter in April-June, after GDP growth surged to 4% y/y in January-March

Retail sales grew 8.4% y/y in current prices in April. In monthly terms, retail sales stayed flat in constant prices and fell 0.2% m/m in current prices. In the first four months of the year, growth came in at 6.9% y/y in constant prices and 8.5% in current prices.

Sales grew in all retail segments on an annual basis at constant prices. The quickest gain came in the textiles, clothing and shoes segment, where sales expanded 19.9% y/y. Sales growth in the pharmaceuticals segment came in at 13.2% y/y, while in the fuels segment the annual growth was 8.1%.

“We expect the positive trend to continue in the coming months, although because of base effects the annual dynamics of growth in retail sales will slow down to an extent. Still, consumption is to remain the main driver of economy… and will affect positively the situation of the state budget and income from VAT,” Bank Millennium commented. 

“The batch of robust Polish activity data for May suggests that the economy is probably growing by around 4.0% y/y, in line with the first quarter‘s outturn,” Capital Economics concluded on the May readings from retail and industry.