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Tax changes drive retail sales in December


The high growth in retail sales in December is not surprising. It reflects improving economic conditions and a higher number of working days, but above all it was driven by consumers bringing forward purchases ahead of the increase in VAT rates and the introduction of less favourable VAT treatment of passenger cars converted into delivery vans effective from 1 January 2011 (sales of motor vehicles, motor cycles and parts were up by more than 40% y-o-y in real terms in December, though several other sectors also posted high double-digit increases last month). Although this front-loading of consumer spending could have a negative impact on sales figures in Q1, we forecast that in 2011 as a whole retail sales at current prices will accelerate to 8.1%, mainly thanks to an anticipated clearer improvement on the labour market.

Paweł Sionko
Construction Market Analyst, PMR

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