Polish retail sales fell 7.3% year-on-year at constant prices in April (chart), the same contraction rate as in the preceding month, the statistics office GUS said on May 23.
The reading is slightly better than the consensus, which expected a decline of 8% y/y. The April fall meets analysts’ forecasts of the retail sector entering a protracted recession, driven by inflation eating into Poles’ real incomes and the exorbitant cost of mortgage repayments due to high interest rates.
Poles’ wallets are also thinner as money accumulated during the pandemic have largely run out by now, analysts also say. Finally, the statistical effect of the arrival of over one million war refugees from Ukraine no longer affects the figures this year.
“Our forecast assuming four consecutive quarters of decline in consumption does not seem overly pessimistic,” PKO BP said in a comment.
On the positive side, PKO BP also said, “we are close to the bottoming out of consumption dynamics, which should start to improve in the second half of the year thanks to the rebuilding of real wage dynamics accompanied by stable low unemployment”.
The overall picture – supported by other high-frequency data published this week – continues to points to Poland’s economic growth at no more than 1% in 2023. That said, there are analysts who say that the worst is over, drawing on better than expected GDP data for Q1.
“Admittedly, the actual GDP figures for Q1 held up better than the monthly data had suggested, with GDP declining by just 0.2% y/y versus forecasts of around 1% y/y,” Liam Peach of the London-based Capital Economics said.
“It’s possible that there are parts of Poland’s economy not captured in the monthly data that are performing well, such as most services. Even so, domestic demand has been pretty weak, driven by household consumption,” Peach added.
Just one of eight main retail segments managed expansion in April, the breakdown of GUS data showed. Sales of textiles, clothing and footwear grew 0.6% y/y in April, the breakdown of GUS data showed. That still represented a slowdown against an already feeble expansion of 1.7% y/y the preceding month.
All other retail sectors suffered declines in turnover in April. Food sales fell 8% y/y versus a reduction of 4.6% y/y in March.
Car and car parts sales slid 5.1% y/y (-1.2% y/y in March), while the turnover in the pharmaceuticals and cosmetics segment retreated 2.5% y/y in the third month after falling 1.8% y/y in March.
Fuel sales fell 14.5% y/y in April (-20.7% y/y the preceding month). Sales of furniture, audio and video equipment and domestic appliances dwindled 14.7% y/y in April after falling 15.2% y/y in March.
Sales added an unadjusted 0.1% month-on-month at constant prices in April after the March gain of 14% m/m.
At current prices, retail turnover expanded 3.4% y/y in the fourth month (+4.8% y/y in March); in m/m terms there was growth of 0.6% (+15.4% m/m the preceding month).
Retail turnover also expanded 1.1% m/m in April following seasonal adjustment (-1.1% m/m in March).
Today's data do not change expectations regarding monetary policy in Poland. In the coming months, the National Bank of Poland (NBP) is forecast to keep at its wait-and-see approach, tracking inflation trends as well as the overall economic situation in the country, analysts say.
As the coming months are expected to bring about declines in the annual CPI inflation rate, the NBP's interest rates will stabilise with little to no room for a cut until the end of the year, the current consensus says.