Slight deceleration in retail sales growth

In accordance with the GUS data released today, retail sales in enterprises employing more than 9 people increased in current prices by 7.9% YoY in February vs. 8.2% in January, running slightly above our forecast (7.8%) and below the market consensus (8.0%). The sales growth rate in constant prices has not changed in February compared to January and amounted to 7.7% YoY.

Mixed impact of frost on retail sales

Conducive to higher dynamics of real retail sales were mainly higher sales in the category "solid, liquid and gaseous fuels” (8.8% YoY in February vs. 1.3% in January). Higher sales in this category can be attributed to unfavourable, compared to last year, weather conditions in February (severe frost), which boosted households' demand for heating fuels. On the other hand, unfavourable weather is likely to have adversely affected car purchases – retail sales growth in the category "motor vehicles, motorcycles, parts” dropped to 6.9% YoY in February vs. 17.9% in January. The return (after a "weaker” January: down by 0.1% YoY) of the dynamics in the category "food, beverages and tobacco products” to a level (2.6% YoY in February) in line with the trend observed towards the end of 2017 also had a positive impact on retail sales growth. Other segments of retail sales had not substantially affected the change in the sales growth rate.

Good prospects for retail sales and consumption

The consumer sentiment survey released today indicates a slight deterioration in households' sentiment. The Leading Consumer Confidence Index dropped in March to the lowest level since December 2017. However, it should be pointed out that its value continues to be significantly higher in YoY terms. This points to good outlook for retail sales growth in the coming months. We expect that the trading ban binding from March 2018 on some Sundays will have a limited negative impact on retail sales. We believe that consumers will make up for the Sunday ban with bigger shopping on Saturdays or with online shopping.

Between January and February 2018 the average growth rate of retail sales in constant prices amounted to 7.7% YoY vs. a 7.0% increase in Q4 2017, posing a slight upside risk to our forecast, in which the private consumption growth rate rose to 5.2% YoY in Q4 vs. 4.9% in Q4 2017.

Retail sales data neutral for PLN and the debt market

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

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