February retail sales disappointed
Retail sales rose by 5% yoy in February, slightly below market consensus and our assumptions. Retail sales were likely adversely affected by weather conditions which were unfavourable to shopping (very low temperatures). Nevertheless, this is the last postcard sent by Polish consumers from before the outbreak of the Gulf War. The picture painted by this data is middling. In the coming months, a combination of relatively low growth in nominal incomes and rising inflation will constrict the purchasing power of Polish consumers further. We expect consumption to slow to 3.2% this year, with risks to the downside.
Retail sales broken down by category (constant prices, % y/y)
Source: GUS, Macrobond, Pekao Research
February's retail sales reading was full of surprises, most of which were negative:
- Car sales growth returned to positive territory (from -4.5 to 2.7% yoy), but not as high as we had hoped. However, we are seeing a recovery in sales following disruptions caused by tax changes at the turn of the year.
- Furniture and household appliances recorded the weakest sales since December 2024, growing at a rate of 7.2% yoy. Perhaps the weaker result was influenced by the weather, delaying seasonal purchases of durable goods.
- Clothing and footwear sales were a major disappointment (12 p.p. below our assumptions) and barely increased (0.8% yoy). Here again, the poor reading may be blamed on winter – winter-related purchases were made in January and the weather delayed the start of spring sales.
- The biggest disappointment in terms of impact on total retail sales was recorded in food sales, which slowed from 4.3 to 0.2% yoy – this alone subtracted more than 1 percentage point from the overall sales growth.
- The only two bright spots in February's retail sales were fuels (+10.2% yoy) and the 'Other' category (+9.4% yoy).
Sales slowed in almost all categories, and most of them were disappointments. Month-on-month, sales fell by 1.1% (s.a. terms), ending a long series of strong readings. It is worth remembering that these data were not affected at all by the Gulf War. Its first effects will be seen in March's retail sales, although seasonal effects (spring + an earlier Easter than last year) and stockpiling fuel ahead of price increases may push its growth rate to a very buoyant level (7-8% y/y).
Retail sales and private consumption (end of 2019 = 100%)
Source: GUS, Macrobond, Pekao Research
However, the likely acceleration in March should not be regarded as a good omen for the entire year. At the start of the year, we already knew that private consumption would rather slow the Polish economy down, not speed it up. Growth in nominal and real incomes – even despite our relatively low inflation forecast – was expected to be lower than in 2025. The oil shock renders much of these calculations null and void. Inflation will average not 1.9 but 2.6% y/y (with risks to the upside), while consumption will rise only by 3.2% (with risks to the downside). Why do we talk about risks? Because the course of the war is unpredictable for us and we can only make assumptions about the development of energy prices.
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