Polish retail sales rose by just 0.1% y/y in February, coming well below the 3.8% consensus expectation and meaning just 1.7% sales growth in January-February, according to non-seasonally adjusted data published Wed. by the Central Statistical Office. The growth rate was well below the 2.5% noted in January. The headline print is even more disappointing considering the low base from a February in which Poland was still suffering from the global crisis. The data create the potential for private consumption to bring a negative surprise in Q1 figures, though it is unclear how much the very cold, snowy weather hurt sales and how much the resulting bounce-back will be. In real terms, retail sales fell by 2.8% y/y, compared with a revised fall of 1.2% in January.

Motor vehicle sales rose by 3.8% m/m in February, though this was well down from a year earlier. This hammered the annual print, cutting it to -12.8% y/y from -2.4% in January. The absence of car-scrappage schemes in Poland's neighbours seems likely to be weighing on the print. Food and related sales also weakened, the annual print sliding to -4.9% y/y from -3.3% the previous month. That is the worst since December 2005. White goods and consumer electronics sales also saw a big dive, falling to -15.7% y/y from -5.7% the prior month. The cold weather and tougher access to credit are the problems here. Unsurprisingly considering the atmospheric conditions, an area of strength was clothing and footwear.

The Monetary Policy Council, which decides rates next Wed., will see its doves emboldened by the weak data to argue against moving to a tightening bias anytime soon. With the labour market still softening, they will note that worries over private consumption with foreign demand still uncertain means it would be more prudent to wait and see. We don't believe the council will move to a tightening bias at the Mar. 30-31 sitting, though a minority of members will likely call for the bias switch from the current neutral, as they did in February.

Retail sales

Item Feb-09 Jan-10 Feb-10 Feb-09 Jan-10 Feb-10 Jan-Feb-10   m/m m/m m/m y/y y/y y/y y/y Retail sales -1.6% -24.4% -4.0% -1.6% 2.5% 0.1% 1.7% Motor vehicles 16.1% -28.5% 3.8% -12.3% -2.4% -12.8% -8.0% Fuels 0.1% -6.7% -3.0% -12.8% 18.4% 14.8% 17.0% Food, drinks, tobacco -2.0% -28.2% -4.2% 2.0% -3.3% -4.9% -3.9% Non-specialised sales -2.9% -21.0% -2.0% 22.9% 11.2% 12.2% 11.7% Pharma, cosmetics -4.6% -17.3% -6.7% 13.1% 18.3% 15.7% 13.2% Clothing, footwear -17.6% -27.3% -11.9% 5.6% 6.7% 14.1% 9.9% White goods, electronics -3.0% -39.3% -13.2% 2.6% -5.7% -15.7% -13.0% Press, books 5.2% -32.0% 0.6% 11.2% 3.1% -1.4% 0.1% Other -9.4% -24.5% -6.8% -7.5% -6.3% -3.6% -1.4%

Source: CSO