Retail sales above expectations

In accordance with the GUS data released today, retail sales in enterprises employing more than 9 people increased in current prices by 9.2% YoY in March vs. a 7.9% increase in February, running visibly above the market consensus (8.2%) and our forecast (8.3%). The sales growth rate in constant prices rose by 8.8% in March vs. 7.7% in February.

Easter holiday supported retail sales

The increase in real retail sales resulted mainly from higher sales in the category "food, beverages and tobacco products” (13.8% YoY in March vs. 2.6% in February) and "retail sales in non-specialized stores” (17.4% YoY vs. 7.9%). Higher retail sales growth rate in these categories resulted from a different configuration of Easter holiday. In 2017 it was in the middle of April which enabled to make Easter shopping in the first two weeks of April. In 2018 it fell at the turn of March and April. As a consequence, in 2018, Easter shopping was done in the second half of March, which boosted the retail sales growth in the above-mentioned categories in March.

The effect of the Sunday trade ban is difficult to estimate

It should be pointed out that higher pace of sales growth was mainly the effect of the shift of Easter shopping from April to March while their dynamics in a majority of categories have gone down. Lower sales growth rate was recorded i.a. in the categories "textiles, clothing, footwear” (13.0% YoY vs. 20.7% in February), "motor vehicles, motorcycles, parts” (-0.6% YoY vs. 6.9%) and "furniture, radio, TV and household appliances” (4.5% YoY vs. 10.2%). On the one hand, this could have been the effect of the unfavourable difference in the number of working days (in March 2018 the number of working days was one day lower than in 2017, while in February 2018 it was the same as the year before). On the other hand, we cannot exclude a negative impact of the Sunday trade ban on sales in these categories. Owing to a significant contribution of statistical effects to the March retail sales data, a fuller assessment of the impact of the imposition of the Sunday trade ban on retail sales will be possible no sooner than in subsequent months. However, we expect that this impact will be limited. We believe that consumers will compensate the Sunday ban by bigger shopping on Saturdays or by online shopping.

Sharp increase in consumption in Q1

Between January and March 2018 the average growth rate of retail sales in constant prices amounted to 8.5% YoY vs. a 7.5% increase in Q4 2017, posing a substantial upside risk to our forecast, in which the private consumption growth rate rose to 5.2% YoY in Q1 vs. 5.0% in Q4 2017. GUS has revised today the quarterly estimates of GDP between 2016 and 2017. The GDP growth rate in Q4 2017 has been revised downwards to 4.9% YoY vs. 5.1%. In turn the GDP growth rate in Q1 2017 has been revised downwards to 4.1% YoY vs. 4.4%. The revisions of GDP estimates support our forecast in which the annual dynamics of Polish GDP will decrease to 4.7% in Q1 2018.

Retail sales data neutral for PLN and the debt market

Today's reading of the March retail sales is neutral for PLN and the debt market, we believe.

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