February's chill affected Polish consumers as well
Retail sales fell by 0.5% yoy in February, significantly below forecasts, which predicted an increase of 3% yoy. Although sector-specific factors played a role in February, the slowdown affected almost all sales categories. Consequently, we are back to the scenario of 3% yoy consumption growth in 2025, without significant upside risks.
By falling by 0.5% yoy (consensus: 3.2% yoy), retail sales surprised on the downside by almost exactly the same scale as it had surprised on the upside a month earlier (+4.8% yoy compared to the consensus forecast of 1.7% yoy). Thus, all the monthly economic activity data in Poland in February disappointed, differing only in the scale of the disappointment. What can we say about February sales?
Retail sales, broken by category (% yoy)
Source: Statistics Poland, Macrobond, Pekao Research
- The slowdown in sales affected almost all categories, from cars and food to the broad category of "Other sales". The only exception was the sale of newspapers, books, and other items in specialized stores.
- The slowdown in car sales (from about 22% to 5% yoy) is the most impactful and least surprising here. The saturation of the market has been visible in the number of new vehicle registrations for some time. The level of sales has also made up for the long-term backlog resulting from supply constraints in the sector in 2020-22 and returned to the pre-2020 trend. Therefore, there was no reason for car sales to grow by 20-30% yoy.
- Sales of furniture and electronics, which caught our attention in January, corrected as expected. However, these expectations assumed that January was not a completely one-off phenomenon. So, after two months, we can conclude that something is afoot in the sale of durable goods and signals of improved consumer willingness to make purchases observed in consumer sentiment data for some time have some real aspect.
- Cold weather might have slightly muddled sales, but this effect was probably limited to sales of clothing and footwear. We would not attribute much significance to it in the context of the overall sales surprise.
- In February alone, sales shrank by 3.2% mom, thus erasing four months of painstaking sales growth at the end of 2024 and in January of this year.
Retail sales in recent quarters teach us patience and stoicism. The upward trend in sales (or more broadly, in consumption) is a fact. However, it is relatively slow and with large fluctuations. Therefore, it is good not to draw conclusions from individual sales readings. If January data indicated some upside risk compared to the consensus forecast of private consumption growth of about 3%, February data removes that risk. Therefore, we are left with the good old scenario of moderate private consumption growth - the only difference compared to 2024 is the change in the propensity to save. Currently, consumers are increasing spending at a pace corresponding to the growth of their real incomes, however low it may be. In summary, the acceleration of economic growth in 2025 (according to our forecasts to 4%) will result from faster investment and exports growth.
Retail sales and private consumption (end-2019 = 100%)
Source: Statistics Poland, Macrobond, Pekao Research
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