Polish retail sales fell 5% year-on-year at constant prices in February (chart), the rate deepening dramatically after a decline of 0.3% y/y the preceding month, the statistics office GUS said on March 21.

The reading is below the consensus, which expected a decline of around 1.5% y/y. Analysts take that as the start of many months with falling sales, the turnover now no longer disguised by the influx of Ukrainian refugees.

That said, according to Santander Bank Polska, the low point of the crisis in consumer spending will have taken place by the end of the first quarter.

“Subsequent quarters will bring some improvement in retail sales and private consumption. However, real household incomes will remain under pressure, so we think the rebound will not be very dynamic,” Santander’s economists Marcin Luzinski and Grzegorz Ogonek said in a comment. 

Poles’ wallets are also thinner as they used up most of the savings accumulated during the pandemic, analysts also say. Finally, the statistical effect of the arrival of over one million war refugees from Ukraine will no longer affect the figures this year.

The overall picture – supported by other high-frequency data published this week – points to Poland’s economic growth at no more than 1% in 2023, most analysts say.

According to the London-based Capital Economics, however, the weakness in activity will be more profound.

“February’s activity data out of Poland paint a weak picture and support our view that GDP will, at best, flatline over 2023 as a whole,” the consultancy said.  

“Even so, the central bank has little scope to help and we expect that high – albeit falling – inflation will prevent policymakers from cutting interest rates until the end of the year," it said.

Of just three out of eight main retail segments that managed expansion in February, sales of textiles, clothing and footwear grew the fastest at 9.9% y/y in February, the breakdown of GUS data showed. That still represented a considerable slowdown against an expansion of 15.7% y/y the preceding month. 

Car and car parts sales added 7.5% y/y (-1.7% y/y in January), while the turnover in the pharmaceuticals and cosmetics segment increased 2.7% y/y in the second month, easing against a gain of 4.5% y/y in January.

Elsewhere, food sales deepened its fall to 4.6% y/y in February after declining 1.7% y/y the preceding month.

Fuel sales collapsed 26.2% y/y in February (-12.3% y/y the preceding month). Sales of furniture, audio and video equipment and domestic appliances slid 10.3% y/y in February after growing 1.4% y/y in January.

Sales fell an unadjusted 4.6% month-on-month at constant prices in February after the January fall of 23.1% m/m. 

At current prices, retail turnover expanded 10.8% y/y (+15.1% y/y in January); in m/m terms there was a fall of 2.8% (-22.8% m/m the preceding month).

Retail turnover also fell 4.1% m/m in February following seasonal adjustment (+2.7% m/m in January).