Polish retail sales fell 0.5% year on year in constant prices in February (chart), defying the consensus, which expected a 3.2% annual increase, the statistics office GUS said on March 24.

The contraction follows a surprisingly dynamic rise of 4.8% y/y in January which gave rise to optimistic expectations for February as well. The unexpectedly poor result suggests, however, that the sustained growth trend in sales is still some time away.

“Recent retail sales data has been highly volatile, so we view the February figures with some caution, just as we did the exceptionally strong results in January,” PKO BP said in a comment.

The overall picture for Q1 2025 is likely to indicate continued solid consumption, though growing at a slightly slower pace than in Q4 2024. March data may show a [further] slowdown in sales growth due to the timing of Easter, which fell at the end of March in 2024 but will be in April this year,” PKO BP also said.

Still, consumption is expected to be a key driver of Poland’s economic growth, which is projected to reach some 3.5% in 2025.

Five out of eight main retail segments expanded on an annual basis in February although the expansion rates were all slower than in the preceding month, GUS data showed.

Sales of cars and car parts slowed to just 5.1% y/y growth in February after rising 21.9% y/y in January. In the pharmaceuticals and cosmetics segment, sales eased expansion to 7.4% y/y, after a sharp 12.8% y/y increase the preceding month.

Textiles, clothing and footwear sales grew 6% y/y in February after expanding 8.8% y/y in January, while sales of furniture, audio and video equipment, and household appliances rose 5.8% y/y, more than halving the January increase rate of 13.6% y/y.

Sales in the press, books and specialised stores category gained 1.7% y/y in February after dropping 11.3% y/y the preceding month.

Other categories saw declines. Sales of food, beverages and tobacco declined 2.2% y/y in February after growing 0.6% y/y decline in January. Fuel sales fell 3% y/y in February after retreating 1.3% y/y the previous month,

In the broader “other” category, sales declined 8.7% y/y in the second month after falling 2.1% y/y in January.

On a monthly basis, retail sales in constant prices fell 6% m/m in February after a 11.3% m/m fall in January, GUS data also showed.

In current prices, retail turnover added 0.6% y/y in February, easing from a 6.1% y/y increase in January. Month on month, turnover fell 6% m/m after contracting 17% m/m the preceding month.

Seasonally adjusted data showed retail turnover decreasing 3.2% m/m in February after a 0.6% m/m gain in January, GUS reported.

Retail sales and other high-frequency macroeconomic indicators are unlikely to influence Poland’s monetary policy outlook significantly – but could give the National Bank of Poland (NBP) some food for thought about cutting interest rates slightly earlier than previously anticipated.

“The weaker-than-expected February retail sales data out of Poland suggests that the economy may have slowed a bit more sharply than we had been anticipating this quarter,” Capital Economics said.

“While this won’t prompt the central bank to cut interest rates at its meeting next month, there is a growing risk of monetary easing arriving earlier than we currently forecast in 2026,” Capital Economics also said.

The NBP’s reference interest rate is at 5.75%, the highest in over two decades.