Data on retail sales in January does not indicate a threat of serious slowdown. Although retail sales at current prices increased by only 0.1 percent on an annual basis, in constant prices it was higher by 3.3 percent compared to January 2014. Polish consumers are buying more and more goods in real terms, but deepening deflation reduces their nominal value.
In January Poles spent in stores 22.1 percent less than in December 2014 mainly due to increased purchases in holiday season. In real terms expenditure on furniture, home electronics and appliances fell the most – by nearly a third. A big drop in sales compared to December last year also applies to clothing, footwear, food and beverages. Annual sales of all of the groups of goods was, however, significantly higher than a year ago, which should reduce concerns about the condition of the Polish economy. For example, in January 2015 Poles spent about 4.5 percent. more (at constant prices) on furniture, home electronics and appliances than in January 2014. One of the few signs of worse mood among Polish consumers may be slow growth cars and car parts sales.
From the point of view of the well-being and satisfaction of consumers data in constant prices is of much greater importance than data in real terms. Also from the perspective of the Monetary Policy Council a single negative retail sales reading is not very important argument for mitigation of monetary policy. Retail sales are characterized by strong seasonal fluctuations, the influence of the so-called calendar and one-off effects. In addition, interest rates are conducive to more investment, which in recent quarters showed very good dynamics. Moreover, the situation on the labour market should continue to stimulate the growth of consumption, because in January 2015 the dynamics of real wages moved closer to 5 percent year to year. In summary, the data on retail sales – although weaker than expected – do not indicate heavy braking for Polish economy.
Damian Olko, expert of the Centre for Research and Analysis of Employers of Poland