Economic Analysis

In today's Eyeopener:

- Today, January HICP inflation data
- LFS data: employment up 0.6% y/y in 4Q last year
- NBP Governor: under the new projection, inflation will remain close to target for two years
- According to preliminary estimates, the 2025 budget deficit was PLN13bn below plan
- Zloty stronger, slight strengthening of longer-dated bonds

This week’s data release calendar will be lighter. Abroad, successive sentiment and business climate indicators will dominate (including Ifo, GfK, ESI and the Conference Board), alongside inflation data from euro area countries, Germany’s 4Q25 GDP, and in the US, among other things, factory orders.
Domestically, we will see January retail sales, money supply, unemployment figures, the GUS Statistical Bulletin, and preliminary results of the Labour Force Survey for 4Q25. Of this set, retail sales will be watched most closely by the market, as winter conditions may also have left their mark here. Our analysis of card payment data (link) suggests that the impact of the weather on consumer spending in January was not dramatic, but sufficient to slow sales growth. Our forecast assumes retail sales growth of around 2% y/y, compared with a market consensus of 3.3% y/y. (...)

In January, retail sales in constant prices increased by 4.4% y/y, down from 5.3% y/y in December, outperforming expectations (market: 3.1% y/y, our forecast: 2.0% y/y). Seasonally adjusted data showed a fourth consecutive positive m/m increase (0.5%). Unlike industrial output and construction and assembly production, the severe winter did not have a clearly negative impact on retail sales. Sales of durable goods in constant prices slowed to 2.4% y/y, while sales of other goods accelerated to 4.8% y/y.

In European industry we are seeing signs of a recovery, suggesting that domestic exporters may enjoy a modest tailwind this year, not least due to the acceleration of the German economy. Domestic data confirm rising activity across most sectors. Demand for credit is clearly increasing. We continue to expect solid consumption growth to be maintained and a strong acceleration in investment. On the other hand, an exceptionally harsh winter is generating additional costs for household and local government budgets, which over time may weigh on their spending, while delays in the disbursement of funds from the Recovery and Resilience Facility mean that even the government is now pointing to the risk that grants may not be fully utilised. As a result, we keep our GDP forecast for this year broadly unchanged, with average growth at 3.9%. (...)