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Polish June Retail Sales Soar Higher Than Expected

Source: Reuters
24/07/2007

Warsaw, July 24 - Poland's retail sales rose 16.2 percent year-on-year in June, faster than forecast, and economists said the strong consumption could fuel inflationary pressures and strengthen expectations for future interest rate rises.

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Analysts in a Reuters poll had forecast retail sales to rise 15.0 percent last month after 14.8 percent growth in May.

The statistics office also said unemployment fell to 12.4 percent last month, a touch below market forecasts and the lowest since October 1999. May unemployment stood at 13.0 percent.

"These are very strong data, consumption is booming," said Grzegorz Maliszewski, economist at Millennium Bank.

"Falling unemployment, rising wages, growing credit activity and the upcoming lowering of non-wage labour costs are all pushing consumption up, increasing the risk of inflationary pressures in the medium-term."

The Polish zloty and bonds were little changed after the data.

The central bank has raised its main interest rate twice so far this year and analysts polled by Reuters expect further monetary tightening as the labour market grows tighter and wages soar.

But analysts expect the bank's Monetary Policy Council (MPC) to hold fire this week and raise borrowing costs in August. The central bank raised the main interest rate a quarter point to 4.50 percent in June.



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