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The dynamics of retail sales calculated at constant prices decreased in June to 4.4% y/y, compared to 5% in May, being below the market consensus (5.3%) and the bank's forecast (5.2%).
Retail sales at fixed prices
After eliminating the impact of seasonal factors, retail sales at constant prices increased in June by 1.5% m/m. The increase in seasonally adjusted retail sales recorded in June signals a continuation of the sales growth trend observed in recent quarters. At the same time, it should be noted that the value of sales at constant prices reached the highest level in history in June, reports Credit Agricole Bank.
Half of the categories reported by the Central Statistical Office recorded a decrease in the annual dynamics of retail sales between May and June ("food, beverages and tobacco products", "fibres, clothing, footwear", "pharmaceuticals, cosmetics, orthopedic equipment", "other").
In the case of the second half of the category, sales dynamics did not change significantly compared to May. As a result, the growth rate of the so-called base sales, i.e. sales excluding cars, fuel and food sold in specialized stores, amounted to 3.7% y/y in June, compared to 4.1% in May. Despite a slight decline compared to May, this dynamics remained at a relatively high level, indicating a high probability of a lasting recovery in consumer demand.
Downside risk for consumption forecast
The data signal a downside risk for Credit Agricole's forecast of an increase in consumption dynamics in the second quarter of this year. (up to 5.1% y/y compared to 4.6% in the first quarter), as well as in the second half. br. Nevertheless, the bank maintains its assessment that the revival of consumer demand, supported by a rapid increase in the real wage bill, will be, as in Q1, the main factor of economic growth in Q2 and throughout 2024.
Such an assessment is supported by the tendency to improve consumer sentiment indicators that have been continuing in recent months for indicators showing the tendency of households to make important purchases now and in the future. However, in the case of other indicators (e.g. the assessment of "change in the overall economic situation of the country" or "change in the financial situation of the household"), consumers are more pessimistic. Such trends signal that the revival of private consumption growth in the second half br. will most likely be smaller than we previously assumed, says Credit Agricole Bank.