Retail turnover indicators stabilize as the future evaluation of households improve

According to the data of the Central Statistics Agency, the seasonally adjusted retail turnover did not change in June 2010 month-on-month. Including automobile trade, which in the retail turnover statistics is not taken into account, a 0.7% rise has been observed. The retail turnover stabilization started in previous months is continuing, as evidenced by several operational indicators - the confidence or future evaluation indicators as assessed by the European Commission, the dynamics of the number of new first-time registered automobiles with the Road Traffic Safety Office, as well as the good indicators relating to some of the tax revenue.

At the points of sale of retail food, the retail turnover has decreased by 0.7% while at non-food retail points of sale it has increased by 0.4%. In comparison to the previous month (seasonally adjusted data) the retail sales of computers and peripheral equipment, sporting goods and games, as well as metal products, paints, and glass has increased substantially. Automobile and motorcycle sales that are not part of retail data have likewise grown - by 3.7 per cent. The greatest drop has been observed in the sales of audio and video recordings, watches and jewellery, as well as household electronic goods.

In June, just like in previous months, the retail turnover was still determined by the growing optimism in the household future expectations - the sales confidence indicator improved by five points and that of consumers by two points. The increase in the number of first-registered automobiles is an additional sign of a rise in household optimism and a more positive assessment of future income. In the surveys of consumer confidence conducted in recent months, the number of consumers that are planning to make large purchases has been on the rise. Such developments indicate a gradual recovery of the domestic demand.

Several risks, however, are also in evidence, which, while the overall situation remains rather stable, may lead to fluctuations in sales developments in the coming months. Even though the retail turnover developments were also reflected in a better tax (excise and value added) revenue dynamics, labour taxes still lagged behind product taxes. This is an indication that the stabilization of retail turnover in recent months is more based on changes in consumer behaviour and other, possibly short-term factors, instead of fundamental change.

The retail turnover dynamics of the next few months can also be influenced by the upcoming parliament elections and the related negative effect on consumer moods. This has been in evidence already in the pre-election period - in July, the sales confidence indicator remained unchanged whereas consumer confidence decreased by two points. It is also expected that in the second half of this year, the labour remuneration fund will continue to shrink, albeit at a slower rate, which will act to reduce the income available to households. The expected price rise for such regulated services as heating energy will also affect the purchasing power of the population.

The retail turnover in June was still 3.1% less than in the corresponding month of 2009. In July-August of 2009, however, the retail turnover had suffered a substantial decrease and, as a result of the base effect, an annual rise was observed in the next few months.