Polish consumer to feel impact of Middle East conflict in March

Retail sales grew by 5.0%YoY in February (ING: 7.8%; consensus: 5.9%) after an increase of 4.4%YoY in January. Seasonally adjusted data indicate a 1.1% MoM decline. The implied deflator of retail sales fell 0.7%YoY after a drop of 0.5%YoY in the previous month.

The faster pace of retail sales growth in February compared with January is unsurprising, but given the low base from last year, we had projected an even higher annual growth rate. A low rate of growth was recorded in the category of durable consumer goods, which had seen an acceleration in growth last year. Growth in sales of furniture, consumer electronics and household appliances slowed to 7.2% YoY, compared with double‑digit increases over the previous 11 months.

After a positive surprise in the “textiles, clothing and footwear” category in January (an increase of 17.7% YoY), February sales were nearly stagnant (0.8% YoY), suggesting that households replenished their shortages of warm clothing in the previous month. Car sales rose by 2.7% YoY, returning to growth after a January correction linked to the accumulation of purchases before the end of 2025.

February’s sales data confirm that the beginning of 2026 was still favourable for consumption, but the real test of consumer conditions will come with the March data, when the impact of the conflict in the Middle East becomes visible. It has led to a sharp increase in petrol prices and a deterioration in consumer sentiment.

This will most likely negatively affect consumer spending in the coming months due to elevated uncertainty, which may translate into a greater propensity to save, as well as a negative income effect (higher fuel expenditure at the expense of other spending). The scale of this impact will depend on the intensity and duration of the conflict.

Our forecast of 3.7% GDP growth in 2026 is based, among other factors, on the assumption that the pace of private consumption growth will remain close to that of 2025, when it increased by 3.7% YoY. At the same time, 2026 will see a significant decline in the growth rate of real disposable income, meaning that a fall in the savings rate is needed to sustain consumption growth.

The emergence of a new source of uncertainty – namely, the war in Iran and the surge in fuel prices – may trigger households' reluctance to draw down their savings. The 2Q26 data may not yet reflect this, but subsequent readings probably will.

Additionally, a rise in expected inflation, driven by fuel price increases, negatively affects real disposable incomes. The deterioration in consumer and business sentiment and confidence poses a risk to consumption and private investment, generating downside risks to the GDP forecast for 2026.