Polish retail sales contracted 3% year on year at constant prices in September (chart), after growing 2.6% y/y the preceding month, the statistics office GUS said on October 22.

The reading did not disappoint as much as it turned out a “collapse,” according to analysts, as the GUS reading arrived sharply off the consensus line - the seventh such occurrence in succession - which projected an increase of 2.2% y/y.

“Negative factors affecting September's data owed to calendar effects with one Saturday fewer than in September 2023 and fewer total business days,” PKO BP said in a comment.

“Additionally, the annual sales dynamics were dampened by a high statistical base in fuel sales, tied to "pre-election promotions" at gas stations a year ago. Without these one-off effects, we estimate that sales in September would have shown a slight increase, though smaller than in the previous month,” PKO BP also said.

Some analysts point to more fundamental causes of the slowdown.

“The weaker consumption in the past quarter is linked to the slowdown in nominal wage growth and the rebound of inflation, which reduced real wage increases. Higher gas and electricity bills, following the withdrawal of the energy price controls in July, left households with less disposable income for other expenses,” according to ING.

“Additionally, the severe flooding in southwestern Poland in September may have further disrupted retail sales during that period,’ ING also said.

Despite the current slowdown, consumption is still expected to drive Polish economic growth in 2024 to more than 3% after an expansion of just 0.1% last year.

“The weakening in consumption is expected to be temporary and not caused by structural factors, especially in the context of historically low unemployment and continued strong wage growth,” Santander Bank Polska said.

Just three out of eight main retail segments managed an annual expansion in September, GUS showed in the breakdown of the data.

Sales of cars and car parts expanded 11.2% y/y in the eighth month, after a gain of 15.7% y/y in August. In the pharmaceuticals and cosmetics segment, sales expanded 5.2% y/y in September, easing markedly against an increase of 11.2% y/y the preceding month.

The bulk segment described as “other” was the third and final segment that registered growth in September, at 2.7% y/y.

Elsewhere, sales fell, sometimes considerably like in the textiles, clothing, and shoes segment, which contracted 12.5% y/y in September (-13.6% y/y in August).

Fuel sales fell 4.8% y/y (+5.7% y/y the preceding month). Sales of food, drinks and tobacco products deepened fall to -7.6% y/y in September after falling just 0.4% y/y in August. 

Sales of furniture, audio and video equipment and domestic appliances slid 8% y/y in September after falling 5.3% y/y the preceding month.

Sales declined 5.7% month on month at constant prices in September after the August gain of 1.1% m/m, GUS data also showed.

In current prices, retail turnover declined 2.2% y/y in September, after growing 3.2% y/y in August. In m/m terms there was a fall of -5.8% m/m (0.9% m/m the preceding month).

Retail turnover retreated 6.7% m/m in September following seasonal adjustment, after growing 1.9% m/m in August, GUS data also showed.