Polish retail sales pick up expansion rate to 10.6% y/y in January

Polish retail sales pick up expansion rate to 10.6% y/y in January
By Wojciech Kosc in Warsaw February 22, 2022

Polish retail sales grew 10.6% y/y in constant prices in January, the growth rate picking up from a disappointing gain of 8% y/y the preceding month, statistics office GUS said on February 21.

The January reading beat market expectations for an expansion of 9.9% y/y but the reason for the solid expansion was primarily the low reference base from January 2020 when retail was constrained by measures to contain the COVID-19 (coronavirus) pandemic. 

Still, January figures defy earlier fears of high inflation about to subdue consumption at least temporarily, Bank Millennium notes.

“January data still show households’ good propensity for consumption, although the y/y growth in retail sales will gradually decline along with the fading out of the low reference base effect, diminished real growth of wages, and the exhaustion of savings accumulated during periods of limited activity due to the pandemic,” Bank Millennium said. 

Poles’ real wages are being hit by high inflation, which climbed to 9.2% y/y in January. On the other hand, the labour market is expected to remain favourable, with the unemployment rate to remain around just 5% throughout 2022.

Five out of eight main retail segments posted y/y turnover gains at constant prices in January, GUS showed in the breakdown of the data.

Sales of textiles, clothing, and shoes almost doubled in January, jumping 97.7% y/y. Food sales grew 3.6% y/y, while turnover in the fuels segment declined 1.5% y/y, GUS data also showed.

Sales of pharmaceuticals grew 19.2% on the year. Sales of furniture, audio and video equipment, and domestic appliances slid 0.4% y/y. Car sales declined 13.5% y/y. 

In current prices, retail turnover expanded 20% y/y (+16.9% in December) in January.

Retail sales and other high-frequency data published for January point to strong economic growth in the fourth quarter, analysts say.

“The beginning of the year … was stronger than expected, posing an upside risk to our 5.1% y/y GDP growth forecast for Q1,” Bank Millennium said. 

“If the economic trends from January are maintained, this would imply a GDP growth of around 10% y/y in Q1. Our full-year GDP growth forecast of 4.1% is becoming much too conservative and a result close to 5% is more likely, although with persistently very high uncertainty,” the state-controlled bank PKO BP said.

In m/m terms and in constant prices, sales fell an unadjusted 22.8% but grew a seasonally-adjusted 3.6%, GUS’ data also showed. In current prices, there was an unadjusted fall of 22.6% m/m. 

First-quarter data do not change much in the outlook for interest rates in Poland. The National Bank of Poland is all but certain to deliver the sixth hike in as many months in March to bring the reference rate up by 50bp to 4%. More tightening later on in the year is not out of the question, with some analysts already pricing in rates at 4.5%.