Polish retail sales hit 6.2% despite slowing wage growth
Polish retail sales accelerated to 6.2% year on year in June, pointing to stronger second-quarter growth but doing little to shift expectations for steady interest rates.
Polish retail sales grew 6.2% year on year in constant prices in June, beating consensus by a full percentage point and rebounding from a 3% rise in May, according to the statistics office GUS. Seasonally adjusted figures showed a 1.7% monthly increase, up from 0.4% the prior month.
The robust spending puzzles economists because it contradicts a marked slowdown in real income growth. "Retail sales are accelerating despite a marked slowdown in real income growth, caused by weaker nominal gains, particularly in wages, and an unexpected rise in inflation. Real wage growth slowed by 1pp in the first half of the year, and the deceleration could reach 2pp in the coming months," Pekao said in a note.
Part of the June uplift is technical, driven by more trading days than a year earlier. Underlying demand was broad, however, with all eight main retail segments posting annual increases compared to six in May. Durable goods led the surge, with furniture, audio, video equipment and household appliances jumping 14.8% year on year. Sales of food, beverages and tobacco returned to growth, rising 1.7% after a 2.8% contraction, while car sales climbed 9.6%.
The spending momentum is expected to support second-quarter gross domestic product. "June retail sales data strengthen the assessment that economic growth accelerated in 2Q, reaching about 3.7% y/y by our estimates, compared with 3.5% y/y in 1Q," Bank Millennium said. The bank noted that while consumption will remain an important pillar, its growth rate will stabilise around 3%, with EU-funded fixed asset investment taking on a larger role.
Despite the stronger consumption data, analysts see no catalyst for a shift in monetary policy. "The incoming data set do not change our expectations for the outlook of the Polish economy or the path of interest rates. We maintain our scenario that, under current conditions, the most likely outcome is that the National Bank of Poland will keep interest rates stable," Bank Millennium said. The central bank cut its reference rate by 25 basis points to 3.75% in March and has held it steady at four subsequent meetings.
