Poland, Retail Sales July 2007

Retail sales in Poland rose in July by 17.1 percent from July 2006 and 1.7 percent from June, according to the Warsaw-based statistics office this morning. This was the fastest annual pace in four months, and has raised expectations that interest rates will be increased for a third time this year, maybe as early as next week.

Variations in the monthly index can be seen in the chart below.



And the rapid rate of increase can be observed in the next chart which shows annual change each month.



Consumer demand, which is being driven by the fastest growth of wages in six years and a record increase in the number of new jobs, is putting considerable pressure on inflation, and this has already produced a half percentage-point increase in the benchmark interest rate earlier this year. Today's data may lead monetary policy makers to raise the interest rate again as early as at their next meeting on Aug. 28-29.

In a separate report, the office said the rate of unemployment in July dropped to 12.2 percent from 12.4 percent in June. The number of unemployed totaled 1.86 million people, or 39,000 fewer then in June and 587,000 below July last year, when the rate was 15.7 percent. The unemployment data confirmed estimates of the Labor Ministry published on Aug. 8.

The zloty was trading at 3.8389 per euro at 10:05 a.m. in Warsaw, up from 3.847 yesterday. The yield on the government's five-year bonds was unchanged for a second day at 5.69 percent.