In the fourth quarter of 2009 retail sales were up by 4.7% compared to a year before; in December the increase was 4.1%. In 2009 retails sales were stronger from quarter to quarter.
In 2009 sales recorded by retailers employing more than nine people rose by 2.7% compared with the very high level a year before. Sales of two groups of products with the highest share in total retail sales – motor vehicles, motorcycles and parts, and liquid, gaseous and solid fuels - were significantly smaller than a year before – by 4.7% and 6.3% respectively. Sales of motor vehicles were growing since the third quarter of 2009 while drops in liquid and gaseous fuel sales were declining until September to rise in the fourth quarter. Sales of furniture and household appliances were only slightly lower (by 1.3%) than in the previous year.
In 2009 sales of clothes and footwear were higher by 22.3% y/y, sales of pharmaceuticals, cosmetics and orthopaedic equipment were up by 14.2%, sales of press and books were up by 1.2%, and sales of food, beverages and tobacco products were up by 4.8% y/y. Wholesale sales in current prices by companies employing more than nine people were lower by 6.6% y/y due to very low indices recorded in the first half of the year.

Sales of transport services drop.

In 2009 transport companies recorded a drop in sales in constant prices of 1.5% y/y, with the value of services provided by companies operating in the public sector going down and the value of services provided by private companies remaining at a level similar to the previous year’s. The drop in sales was noted in the first three quarters of the year while increases – differing greatly depending on the type of transport - were registered in the fourth quarter.
The highest increase was recorded in 2009 in road transport (by 8.2%) and pipeline transport (by 9.5%). Drops were recorded in rail and air transport - by 19.3% and 16.3% respectively. In warehousing and services for transport there was a drop of 6.7%.

Sales of communications services go up.

It is estimated that in 2009 the value (in constant prices) of postal, courier and telecommunications services was by 2% higher than in 2008. The value of services provided by businesses employing more than nine people were higher by over 4%, with a higher increase registered in sales of postal and courier services than telecommunications services.
The number of mobile subscribers and users of pre-paid services rose in 2009 by 874,000 million. The increase was smaller than in the previous year. At the end of 2009 the number of subscribers and users amounted to 45 million and was by 2% higher than at the end of 2008. The number of mobile subscribers and users per 100 population was 117.8, compared to 115.6 in 2008.
In 2009 there was a further decrease in the number of trunk lines. The trend has continued since 2005. At the end of 2009 the number of trunk lines (fixed-line telephone subscribers) in the public fixed-line telephone network amounted to 8.3 million and was by around 10% lower compared to the end of 2008. The same trend is present in most European countries owing to the expansion of mobile services.
The number of ISDN lines (digital telephone network for integrated voice, image, fax and data transfer) amounted at the end of 2009 to 1.1 million and was by about 8% lower than at the end of 2008. The number of trunk lines per 100 population was 21.7, compared to 24.3 in 2008.


In January 2010 the overall outlook for the retail sector was negative but slightly better than in December, with 17% of the surveyed retailers signalling an improvement and 22% a deterioration in business conditions.

In January current sales went down but not as much as in December. Despite that, retailers had less difficulty meeting their financial obligations. The increase in current and future prices was signalled to be smaller than had been expected in the previous month. Job cuts may be smaller than previously predicted. Stocks of goods continued to be excessive. As a result, the amount of good ordered from suppliers may be smaller.
The highest positive outlook indices were recorded by retailers selling home articles, textiles, clothes and footwear. Indices were negative for other groups of retailers but many of them noted an improvement compared to the previous month.
The situation of retailers differed depending on the size of the business. Small retailers, including micro businesses, were pessimistic but outlook indices for medium and large retailers were positive, though the retailers were more cautious in their assessments than a month before. The situation of large retailers was the best as they were the only group to signal a rise in current and future sales, although their financial situation may deteriorate.
In January 4.1% of the surveyed retailers said there were no barriers to their operations versus 4.4% a year before. The main barriers were market competition (signalled by 60% of the surveyed retailers versus 67% in December 2009), high labour costs (51% versus 56% a year before), insufficient demand (47% versus 44%) and high fiscal burdens (44%).

In January 2010 there were marked differences in how service companies assessed business conditions. Service companies operating in the financial and insurance sector were the most optimistic, though not as much as in the previous month. The most pessimistic were companies operating in the culture, entertainment and recreation sector and those providing accommodation and restaurant services.

Competition from Polish businesses and insufficient demand were indicated as the most serious barriers to business activity. Compared to December, no significant changes were noted in January in the significance of other barriers.
In January 2010 the outlook for the financial and insurance services sector was positive, though worse than in December, with 31% of the surveyed businesses reporting an improvement and 7% a deterioration in business conditions. Managers signalled a worse situation in terms of current demand and sales. Projections were also less optimistic. In January 2.8% of the surveyed companied reported no barriers to their operations. Competition from domestic companies was the greatest barrier – indicated by 77% of those surveyed. Compared to last year, no significant changes were noted in the significance of other barriers.
In January 2010 the outlook for the information and communications sector was positive and at a higher level than in the previous month. 24% of the surveyed businesses reported an improvement and 8% reported a deterioration in business conditions. Assessments of current demand, sales and financial situation and projections for coming months were optimistic. Managers assessed their companies’ financial situation as favourable. One may expect a slight drop in the number of jobs. In January 5.9% of the surveyed businesses said there were no barriers to their activity. Competition from other Polish companies was indicated as the greatest barrier – by 52% of those surveyed. The second most important barrier were labour costs (41%). The significance of the latter barrier diminished the most. The barriers created by insufficient demand and difficult access to loans increased the most from last year – from 22% to 33% and from 4% to 14% respectively.
In January the outlook in the transport and warehousing sector was negative but stronger than a month before. 14% of the transport companies surveyed reporting an improvement and 24% a deterioration in business conditions. Assessments of current and projected demand and sales improved. Although assessments of the companies’ current financial situation were more favourable, managers expected a deterioration in this situation in the next three months. In January 4.6% of companies reported no barriers to their operations. Competition from domestic companies and insufficient demand were the most serious barriers, indicated by 51% of those surveyed each.
In January the outlook of businesses offering accommodation and restaurant services was negative. 11% of the surveyed businesses reported an improvement and 23% reported a deterioration in business conditions. Assessments of current and projected demand, sales and financial situation deteriorated. Prices may increase and job cuts were expected. In January 2.8% of the surveyed businesses reported no barriers to their operations compared to 6.7% a month before. Labour costs and insufficient demand were the most important barriers - indicated by 55% and 49% of those surveyed.

In the fourth quarter of 2009 a further improvement was noted in consumer sentiment.

In the fourth quarter of 2009 the reading of the current consumer confidence index, which describes current trends in individual consumption, reached 19.2 pct. points and was higher than in the third quarter. The forward-looking index, which describes trends in individual consumption expected in the next months, rose by 1.0 pct. points quarter on quarter to 28.1 pct. points. The indices did not reach the level recorded in the fourth quarter of 2008, despite their steady growth.
The visible improvement in consumer sentiment noted in the fourth quarter of 2009 resulted from favourable changes in almost all basic factors which have an impact on household consumption. The only factor which did not contribute to the improvement in consumer sentiment was the outlook on changes in the financial situation of households. The direction of change in this outlook indicates that Polish households noticed a slowdown in household income growth in 2009 but expected and still expect a faster improvement in their financial situation. The households are also increasingly convinced that Poland’s economic growth rate will rise in the near future. In 2009 growing fears of unemployment were an especially unfavourable component of overall consumer sentiment.
In the fourth quarter of 2009 the outlook on the households’ potential to buy improved. A further slight improvement was also noted in the outlook on the households’ potential to save.
The trends in consumer confidence indices recorded in 2009 indicate that unfavourable tendencies in household consumption caused by the economic slowdown are being reversed.

Consumer prices

In the 12 months to the end of December 2009 prices of consumer goods and services rose by 3.5% compared to 3.3% in 2008. In December prices of consumer goods and services stayed at a level close to that noted in the previous month. In 2009 the construction price index was 100.2 compared to 2008; in December construction prices were lower by 0.4% compared to December 2008. The producer price index was 103.4 in 2009 and 102.1 in December 2009.
In 2009 the largest upward contribution to inflation came from housing and household services and food. Prices of alcoholic beverages, tobacco products, hotels and restaurants, education and health-care services also increased. Prices of transport, clothes and footwear decreased.

In December 2009 the producer price index (PPI) was 2.1%, against 1.9% in November. In construction, the price index was -0.6% against -0.8% in November.

A significant increase in prices, higher than in previous months, was recorded in December in the mining sector: 22.8% against 19.7% in November. In the electricity, gas and water supply sector, the increase in prices reached 10.8% and was close to the November figure (10.9%). In manufacturing, prices were lower by 0.6% y/y; in November they were lower by 0.7% y/y.
In construction, growth in prices was gradually slowing for several months. In December construction prices were lower by 0.6% y/y. This was due to drops in prices of building materials and a slowdown in construction wages.

Interest rates kept on hold, with the reference rate at 3.5%

At a meeting on January 25 and 26, the Monetary Policy Council kept central bank interest rates on hold. The annual reference rate is 3.50%, lombard rate is 5.00%, deposit rate is 2.00% and rediscount rate is 4.75%. From October 2008 to January 2010 the key rate was reduced by 250 basis points (from 6% to 3.50%).

The Monetary Policy Council expects that in 2010 inflation will decrease to a level close to 2.5%, the rate recommended in the Monetary Policy Guidelines for 2010.

In December 2009 CPI inflation rose to 3.5%, reaching the upper-end of the inflation target band. This was mainly due to the positive base effect from the sharp drop in fuel prices in December 2008. At the same time, core inflation, excluding food and energy prices, decreased slightly to 2.6%, which was largely attributable to a slowdown in prices of services.
The Council assesses that in coming months inflation will be pushed down by the negative base effects from a strong increase in regulated and food prices at the beginning of 2009. Low demand pressure, an earlier moderate increase in labour costs and the earlier appreciation of the zloty will also be pushing inflation down. The factors expected to prop up inflation in 2010 include a rise in raw material prices on global markets, increases in taxes and fees imposed by local governments, excise tax and regulated prices. The Council assesses that in the medium term the probability of inflation running below or above the inflation target is similar. (...)
The impact of the expansive macroeconomic policy pursued by other countries and of the expected change in this policy on future economic growth and inflation in the world is an important source of uncertainty for the Polish monetary policy. The situation of public finances is an important determinant of monetary policy. Taking measures aimed to permanently reduce the government deficit would be conducive to macroeconomic stability and would enable Poland to meet euro adoption criteria. The Council is sticking to its to-date position that Poland should enter ERM II and the euro zone as soon as possible, after political support has been secured for amendments to the Constitution of the Republic of Poland and other legislation necessary for euro adoption in Poland. (“Minutes of the Monetary Policy Council Meeting,” January, 26, 2010; p. 1 and 2; www.nbp.pl)