Poland's retail sector weaker than expected
Polish retail sales rose in February—but the upturn was less impressive than hoped for. Despite a five percent increase year-over-year, the figures fell short of analysts’ expectations.
One reason is the weather: The unusually cold February dampened consumer spending, as many consumers had already made major purchases in January. But economists see this as only part of the explanation.
The figures are considered the last unadulterated snapshot of consumer sentiment before the recent upheavals in the energy markets. Analysts anticipate growing pressure in the coming months: rising prices coupled with moderate income growth could noticeably dampen purchasing power.
This is causing a key pillar of the Polish economy to waver. Private consumption has been a major driver of growth in recent years—a slowdown would have direct consequences for the economy.
Broad but Uneven Growth
Although sales increased in most segments, the momentum slowed. This is particularly evident in the apparel sector: after a strong January, growth virtually came to a halt in February.
Other sectors showed more stable performance. Fuel sales rose significantly, and furniture and household appliances also recorded growth—albeit at a slower pace than in the previous month. At the same time, sales of newspapers and books declined significantly.
Compared to January, retail sales fell significantly. Even after adjusting for seasonal effects, a decline is evident—a sign that the year-over-year increase is primarily due to base effects. For the Polish central bank, the figures change little for now. Given rising energy prices and persistent inflation risks, it is likely to stick to its cautious course.
Interest rate cuts currently seem unlikely—on the contrary: if price pressures continue to mount, the period of stable or even higher interest rates could last longer than previously expected.
