Retail sales recovered in January after the disappointing December result. The indicator remains very volatile; this time the reading is significantly above estimates. There was a positive calendar effect in January (more working days). The headline figure was mainly driven by sales of cars. Strong car registrations had indicated good sales but the actual growth was even stronger than expected. Besides that we can also see a high growth in sales of computers and telecommunication equipment and household equipment. On the other hand sales of fuels fell in real terms as prices surged and weighed on the demand. Contribution of food to the sales growth was not very significant in January.
Retail sales have improved despite the high unemployment and the decreasing amount of wages in 4Q. The January figure may be an argument for the CNB to lift interest rates sooner than suggested by the staff projection. Moreover, some hawkish comments have recently come from the CNB. The risk of higher rates has therefore risen. However, it is good to stress that the retail sales data are rather volatile than consistently improving and that labor market still remains weak. We expect retail sales to show a 1-2 pct growth this year, which would not be much better compared with 2010.
Actual (Jan): 6.8 % y/y
Consensus: 2.5 % y/y
Previous (Dec): -0.2 % y/y