Polish retail sales fell 4.7% year-on-year in constant prices in June (chart), easing their fall by 2.1pp compared to the preceding month, the statistics office GUS said on July 21.

The reading was in line with consensus, meeting the forecasts of the retail sector going through a recession in the first half of the year, driven by inflation eating into Poles’ real incomes and the high cost of mortgage repayments due to high interest rates.

Analysts say that the second half of 2023 could see some improvement.

“We remain optimistic about private consumption in the second half of the year. [Spending] will be supported by consumers’ growing optimism and the improvement in real wages,” Santander Bank Polska said in a comment.

The overall picture – supported by other high-frequency data published this week – continues to point to Poland’s economic growth at around 1% in 2023.

None of the eight main retail segments managed expansion in June– although most recorded less precipitous falls than in May – the breakdown of GUS data showed.

Food sales fell 3.8% y/y versus a reduction of 5.3% y/y in the fifth month. Sales of textiles, clothing, and footwear declined 1.9% y/y in June, following a slide of 4.9% y/y the preceding month.

Car and car parts sales fell 1.9% y/y (-2.7% y/y in May), while the turnover in the pharmaceuticals and cosmetics segment was flat y/y in the sixth month after falling 3.8% y/y in May.

Fuel sales fell 8.3% y/y in June (-11.8% y/y the preceding month). Sales of furniture, audio and video equipment and domestic appliances dwindled 14.4% y/y in June after falling 14.8% y/y in May.

Sales added an unadjusted 0.9% month-on-month in constant prices in June after the May fall of 1% m/m.

In current prices, retail turnover expanded 2.1% y/y in June (+1.8% y/y in May); in m/m terms there was a gain of 0.6% (+1.1% m/m the preceding month).

Retail turnover also expanded 0.6% m/m in June following seasonal adjustment (+1.1% m/m in May).

Today's data come against the changing context of Poland’s monetary policy. The National Bank of Poland (NBP) is currently expected to deliver a first interest rate cut possibly as soon as September in response to disinflation now visible across all main indicators. 

Polish interest rates are at their 20-year high of 6.75%.