Consumer purchasing power on the increase

Photo: sxc.hu

In the past twelve months, the average salary in Poland has increased by only 3.5 percent. At the same time, consumer prices have been declining in July-September, by 0.2-0.3 percent year-on-year.

“Deflation in the prices of food and fuels means that the purchasing power of incomes is growing in real terms,” Bank Millennium chief economist Grzegorz Maliszewski told information agency Newseria.

So far, the positive effect of deflation has not been significant and retail sales in September grew by only 1.6 percent year-on-year compared to the expected 2.4 percent.

Nevertheless, Maliszewski pointed out that consumer optimism is growing, fuelled not only by lower prices, but also by a better situation on the labour market.

“An improvement in consumer sentiment is also visible in the consumer confidence indicators prepared by the Central Statistical Office,” the economist said.

Another factor is low interest rates, which may be cut even more in November and December. In the opinion of Maliszewski, this may translate into housing investments from the part of households.

“The prices of real estate have not grown so much that it would limit purchasing options,” he said.

“It is highly likely that expenses for durable goods will grow,” the economist added, also referring to the availability of cheaper credit, this time for household goods or electronics.

“When we talk about growth, we do not mean a consumption boom,” he stressed. “But it seems that a several-percent growth in retail sales is sustainable.” (kw)