Tuesday, July 24, 2007

Polish Retail Sales May

From Bloomberg:

Poland's Zloty Gains as Report Shows Faster Retail Sales Growth

By Ewa Krukowska

July 24 (Bloomberg) -- The Polish zloty rose against the euro after a government report showed retail sales grew faster than forecast last month, stoking speculation the central bank will continue to raise interest rates this year.

Retail sales growth quickened to 3.1 percent from May and 16.2 percent from the same period last year, the fastest pace in three months, the Warsaw-based central statistical office said today. The figures exceeded the median estimate of economists surveyed by Bloomberg News, who predicted sales would rise 1.5 percent on the month and 14.5 percent on an annual basis.

``The figures show that consumption demand is rising dynamically and that inflation pressure is increasing,'' said Grzegorz Maliszewski, an economist at Bank Millennium in Warsaw. ``It will serve as an argument for the central bank to continue tightening monetary policy'' which will support the zloty.

Against the euro, the zloty rose to 3.7599 by 11:08 a.m. in Warsaw, from 3.7613 late yesterday.

Polish government bonds fell on the interest rate expectations, with the yield on the 4.75 percent benchmark bond due April 2012 gaining 1 basis point to 5.45 percent.

The central bank increased borrowing costs in April and June to 4.5 percent to stem inflation. Policy makers will probably leave rates unchanged at tomorrow's meeting of the Monetary Policy Council, according to all 23 economists surveyed by Bloomberg.


Retail sales rose 16.2 percent from last year and 3.1 percent from the month before, the Warsaw-based central statistical office said. The median estimate of 15 economists in a Bloomberg survey was for a 14.5 percent annual advance and a 1.5 percent monthly gain.

Poles have been buying more vehicles, furniture and household appliances as their salaries have grown and more jobs have been filled during the fastest economic growth in a decade. Consumer demand has spurred inflation, leading to a half percentage-point increase in the benchmark interest rate, and may influence the central bank's decision on whether to raise again this quarter.

``Pressure on prices growth in retail sales has gradually been growing,'' said Maciej Reluga, chief economist at Bank Zachodni WBK in Warsaw. ``The rate increase may take place next month.''

The economy expanded an annual 7.4 percent in the first quarter, the fastest in a decade, and is forecast by the government to grow 6.5 percent for the full year. This helped cut unemployment to near an eight-year low of 12.4 percent in June and led to an increase in annual corporate wages of more than 9 percent the same month.

The central bank in April and in June raised the benchmark seven-day reference rate in two steps to 4.5 percent after keeping it unchanged since March last year. The council starts its two-day meeting on rates today. The decision will be announced tomorrow.

The zloty traded at 3.759 per euro at 11:15 a.m., little changed from earlier in the morning and up from yesterday's close of 3.761. The yield on the government's five-year bond rose 1 basis point to 5.444 percent.

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