Retail sales increased by 5.8 percent year-on-year in August, just slightly lower than analysts' expectations and 1.1 percentage points lower than in July. The data marked the third month in a row in which retail sales growth declined in comparison to the previous month.

“In our view, overall the data confirm rather gloomy outlook for consumer’s demand resulting from small wage increase and falling job security,” wrote Maciej Reluga, chief economist at Bank Zachodni WBK in an e-mailed statement.

“The weakening of consumption is caused by slowdown of real incomes,” agreed Rafał Benecki, chief economist for Poland at ING. He added that he expects wage growth in the coming quarters to remain negative. “Consumption growth should remain weak, but we don’t expect significantly deeper growth than the 1.5 percent y/y reached in Q2 2012,” he said.

Economists said the data made it more likely that the National Bank of Poland would cut interest rates in the near future, probably at either its October or November meeting.

Mr Benecki said that ING was assigning a slightly higher likelihood to a cut in October, while Mr Reluga pointed to statements by Anna Zielińska-Głębocka, a member of the rate-setting Monetary Policy Council, that indicated that an interest rate cut would be considered in October.

RG, AK