Polish retail sales slid 2.3% year on year at constant prices in December (chart), after easing 0.3% y/y the preceding month, the statistics office GUS said on January 22.

The reading is a negative surprise, as the consensus assumed an expansion of 1.7% y/y. Despite the December fall – which indicated an unusual refrain in Christmas spending – the fundamentals of a sustained recovery in consumption remain unchanged, analysts say.

Fast-growing real wages, low unemployment rate and improving consumer sentiment are expected to lift the retail sector in 2024 from last year’s lull.

“While it seems as though consumers may have cut their spending at the end of last year, we think that this is likely to be temporary and that lower inflation should support a renewed revival in 2024,” Capital Economics said.

"The anticipated consumer boom has solid foundations – wages are once again rising more strongly than inflation, consumer sentiment is consistently improving, and the labour market remains stable," PKO BP said.

Consumer spending has long been a key driver of Poland’s economic growth. The overall picture continues to point to Poland’s economic growth at no more than 1% in 2023. A more pronounced growth of around 3%-4% is anticipated in 2024.

Just two of eight main retail segments managed an annual expansion in December, GUS showed in the breakdown of the data.

Sales of cars and car parts grew 10.2% y/y in the twelfth month, the growth rate slowing down after a gain of 11.8% y/y in November.

In the pharmaceuticals and cosmetics segment, turnover grew 2.2% y/y in December after an expansion of 4.1% y/y the preceding month.

Elsewhere, fuel sales declined 6.4% y/y (-0.9% y/y the preceding month) in December while sales of food, drinks and tobacco products fell 4.6% y/y versus a reduction of 2.6% y/y in November. 

Sales of textiles, clothing and footwear retreated 4.1% y/y in December, following a slide of 4.4% y/y the preceding month.

Sales of furniture, audio and video equipment and domestic appliances shrank 11% y/y in December after falling of 10.1% y/y in November.

Sales jumped 11% m/m at constant prices in December after the November fall of 2.8% m/m.

In current prices, retail turnover expanded 0.5% y/y in December, easing 2.1pp in comparison to the November reading. In m/m terms there was an expansion of 10.6% (-1.8% m/m the preceding month).

Retail turnover accelerated fall to -2.9% m/m in December following seasonal adjustment, versus a decrease of 0.8% m/m in November.