Economic comment

Retail sales rose 3.1% y/y in November, slightly below market consensus and our forecast – both at 3.9% y/y. Seasonally adjusted sales increased by 1.1% m/m and 5.5% y/y, which is a solid result, only marginally below October’s 5.6% y/y rise, and confirms, in our view, that consumer demand remains quite strong. The growth rate of durable goods sales stayed very high, close to 15% y/y. We expect moderately fast growth in private consumption to continue in the coming quarters, with a stable contribution to GDP growth. December’s deterioration in business sentiment in industry was accompanied by improvement in transport, construction and retail trade. In November, agricultural product prices fell sharply, creating room for further easing in food price growth in CPI in the coming months.

Today’s broad set of data brought mixed feelings, mostly surprising us by moving in the opposite direction to expectations. The figures suggest downside risk for investment and GDP growth forecasts in 4Q25, but for now we maintain our GDP growth forecast at 3.9% y/y. The entire data set supports our view that the MPC will hold off on another rate cut until March. Wage growth in the enterprise sector accelerated to 7.1% y/y in November from 6.4% y/y in October, contrary to expectations of further slowdown to 6.2% y/y. Industrial output broke its good streak and contracted by 1.1% y/y in November, a disappointing result after strong readings in the previous two months. In construction, output was also weaker than expected, rising only 0.1% y/y. (...)

With Christmas approaching, we decided – with a touch of humour – to take a closer look at the cost of organising this year’s festive celebration. We identified two main cost components of Christmas: the Christmas Eve and holiday gathering at the table, and gifts. For each of these factors, we built a price index to reflect changes in their cost. The indices were constructed based on GUS inflation data, our bank’s card spending data, survey results, anecdotal information and expert knowledge.

Our indices show that festive food will be 2.4% more expensive y/y, and gifts 2.6% y/y – which, compared with income growth of 9.4% y/y, means the strongest increase in purchasing power in years and thus potential for higher spending. These could be prosperous holidays.