Commentary on Retail Sales Data of June 2009

The eventful month of June (local elections, amendments to the state budget, summer solstice celebration) was marked by a new drop in retail sales. .A certain confusion and worries regarding future income as a result of state budget amendments caused the population to limit their spending, which is reflected in the data on retail sales turnover in June. Compared to May, according to seasonally adjusted data, the turnover was down 5.1%. The drop in retail sales volumes after the growth of previous monthswas signalled the drastic worsening of the consumer mood index despite the at times contradictory observations of retail business representatives.

In the breakdown by group of goods, the trade data indicate a drop both in food and non-food retail sales; however the demand for food items has fallen more rapidly than that for non-food itemes (7.7% and 3.6% respectively), which indicates that worry about change is more pronounced among the less well-to-do segments of the population.

July indicators are not likely to point to radical changes in trade volumes. .Despite the uncertainty regarding the plans for 2010 budget amendments, a certain stability in the economy and in the expectations of the population will be fostered by the agreement with the international lenders, which is of particular importance for improving investor attitudes.