Strong drop in retail sales in February

Strong drop in retail sales in February

In accordance with the data published by Statistics Poland (GUS) today, nominal retail sales growth reported by businesses having more than 9 employees fell from 6.1% YoY in January to 0.6% in February, printing markedly below market consensus (5.0%) and our forecast (4.3%). Growth in retail sales at constant prices slowed from 4.9% YoY in January to -0.5% in February, also markedly below market expectations (3.3%) and our forecast (2.8%). Seasonally-adjusted retail sales at constant prices contracted by 3.2% between January and February. This means that February saw the lowest retail sales since September 2024.

Broad-based slowdown of sales growth

Annual sales growth was driven down by last year’s high base, unfavourable calendar effects and a surprisingly harsh slowdown in wage growth in the enterprise sector in February 2025 resulting in the year-on-year real wage fund growth rate falling to the lowest level since September 2023 (see MACROpulse of 20/03/2025). Sales growth slowdown in February was much stronger than expected, though, and it was broad-based, with annual sales growth going markedly down in all categories except “other sales in non-specialised stores”. Notably, momentum slowdown was particularly strong in categories comprising durable goods. In the “furniture, electronic goods and household appliances” category, retail sales at constant prices plummeted from 14.0% YoY in January to 5.8% in February, while in the “motor vehicles, motorcycles, parts” category they fell from 22.1% YoY to 5.1%. Such a strong decline in sales growth in those categories is not consistent with the consumer confidence improvement seen over the last couple of months, and mirrored by the major purchases trends indicator. In February, the indicator reached the highest value since September 2021, and then went up once again in March.

Adjustment or trend reversal?

We interpret the February’s strong slowdown of retail sales as an adjustment following the surprisingly strong acceleration of growth in January (see MACROpulse of 24/02/2025). Consequently, the negative retail sales growth momentum seen in February is not a signal of a substantial, lasting slowdown of consumption growth in our view. Nonetheless, we have concluded that today’s data on retail sales mitigate the upside risk to our consumption forecast for Q1 2025 (2.5% YoY) and 2025 (2.2%) indicated by markedly-better-than-expected data on sales in January. We still believe that the process of rebuilding financial assets, which was squeezing the households’ consumption propensity in H2 2024 will slow down markedly in 2025, which will be conducive to a marked growth in consumption demand despite a clear decline in real wage fund growth momentum across the entire economy (see MACROmap of 20/01/2025).

Today’s data on retail sales in February is negative for the PLN and the yields on bonds.