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Central Statistical Office, retail sales data. Commentary of PKO BP bank analysts

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In 2023, we will face a consumer recession and a relative resilience of investment activity, economists from PKO Bank Polski assessed. Commenting on Tuesday’s data from the Central Statistical Office, they assessed that the fall in retail sales in January was worse than expected.

Retail sales at constant prices in January 2023 fell by 0.3 percent. on an annual basis, and on a monthly basis it fell by 23.1 percent. The Central Statistical Office announced on Tuesday. Retail sales at current prices increased by 15.1% last month. y/y Construction and assembly production in January 2023 increased by 2.4%. yoy, and compared to the previous month it decreased by 55.1 percent.

Consumer recession

In 2023, PKO BP experts expect a consumer recession and relatively resilient investment activity. Estimated data about GDP for Q4 2022 indicate a real decrease in consumption by over 1.5%. y/y, which – in their opinion – will be maintained for the next four quarters in response to the decrease in the purchasing power of the population’s income, the use of the pandemic liquidity cushion and the statistical effects related to the influx of refugees at the turn of Q1 and Q2 2022. inflationcombined with stable unemployment and maintaining nominal wage growth, will allow for a return to consumption growth at the end of this year, analysts estimated. They pointed out that the decrease in retail sales in January followed a 0.2% y/y increase in December and is a worse reading than expectations (PKO: +1 percent, consensus: +0.3 percent). At the same time, it is the first drop since February 2021. In the bank’s opinion, in the coming months the y/y dynamics will no longer be boosted by the influx of refugees from Ukraine, which covers up the ongoing consumer recession. “Among the retail sales category, only sales of clothing and footwear (+15.7% yoy) and pharmaceuticals and cosmetics (+4.5% yoy) are growing solidly, as well as other sales in non-specialized stores concealed by the Central Statistical Office, hiding the largest discount chain “, said the experts.

Deep decline in consumer demand

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Sales of furniture, electronics and household appliances increased by 1.4 percent. In the opinion of experts data of the Central Statistical Office show a deep decline in consumer demand – sales of newspapers and books decreased by 8.6 percent. yoy, and cars by 1.7 percent. y/y Food sales down 1.7%. may partly reflect – it was submitted – a shift in preferences towards discounters. Decrease in fuel sales in real terms by 12.3 percent. reflects the fall in demand caused by high prices and lower transit. In the opinion of analysts, the dynamics of construction and assembly production above expectations (PKO: -0.8 percent, consensus: -3.8 percent) was boosted by the warm winter, which made external works more efficient.

“The downturn in the construction of buildings is getting stronger – the value of production (in constant prices) was lower by 10.3% yoy, frozen by the stoppage of the mortgage loan stream” – they assessed.

Read also: Customers may be unpleasantly surprised. “I’ve never seen anything like it”

Main photo source: Nataly Reinch/Shutterstock

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