Retail sales surprised positively in July, growing by 4.8% yoy (our forecast: 2.5%, consensus: 3.5% yoy). This is the third-best result of 2025 and one of the strongest in recent years. In the first seven months of the year, retail sales rose by an average of 3.3% yoy, matching the pace at the end of last year. However, due to a low base, the end of the year should bring further acceleration and an even better annual result.

Retail sales of goods (% y/y)

Source: GUS, Macrobond, Pekao Analizy

What stands out in July retail sales figures?

1. (First and foremost) Durable goods sales returned to good form after a weak June. Car sales are again growing at a double-digit pace, and furniture and electronics/home appliances sales rose by 15.3% y/y (the second-best result in this cycle).
2. Among the positive surprises, textile, clothing, and footwear sales performed better than expected. In our view, this is not due to the weather (which is not a significant factor in July), but rather a growing propensity for consumption.
3. Fuel sales were relatively weak (4 percentage points slower than we expected), but this was more than offset by positive surprises elsewhere.
4. Other categories are not worth mentioning, in our opinion, as there weren’t any surprises or significant contributions to July’s acceleration in retail sales.

In our publications, we have repeatedly referred to private consumption as the dark horse of 2025. There are two ways to look at it. First, among the three main economic activity indicators, sales are clearly performing best. Second, the unexpectedly strong result for consumption is mainly impressive relative to expectations and the limited attention it received in forecasts and macro scenarios for this year. To recap: consumption was expected to grow by 3% this year, similar to 2024. Meanwhile, a drop in inflation (about 1 percentage point below forecasts from the start of the year) boosted real consumer incomes and opened the door for faster spending growth. The acceleration in sales described at the beginning of the text is a good approximation of what we can expect. Instead of 3%, private consumption will likely grow by 3.5% in 2025.

Comparison of monthly activity indicators (% change since December 2023)

Source: GUS, Macrobond, Pekao Analizy

From the perspective of annual GDP forecasts, this is, however, a glass half-empty type of situation. Consumption is import-intensive, so its acceleration does not necessarily benefit domestic producers and their employees (in other words, it does not necessarily generate domestic added value). With stagnating foreign demand and zero contribution from labor supply to economic growth, the Polish economy is now hitting the speed limit set by domestic engines of growth.