Poland's consumer price index expanded 2.1% y/y in October, slowing down 0.1pp compared to the annual growth rate seen in September, statistics office GUS announced on November 13.
Once again, accelerating price growth in the food segment was behind CPI expansion, the data showed. The data confirm a flash estimate released at the end October and show that the inflation rate might have slowed down, but the slowdown is unlikely to prove a lasting trend. In monthly terms, prices grew 0.5% in October after an expansion of 0.4% m/m the previous month.
Inflation is expected to remain on an upward trend and next year may exceed the target of the central bank, Bank Millennium notes, however.
“Importantly, the structure of inflation will change and will increasingly be driven by core inflation and supply factors will have a diminishing impact on CPI,” the bank wrote in a comment.
Food became 5.8% more expensive in annual terms in October. Housing costs grew 2.6% y/y – including growth of 2.5% y/y in energy costs - while prices in the restaurant and hotels segment increased 2.5% y/y. Prices in the transport segment grew 0.4% y/y. That included a 1.6% y/y growth in the prices of fuels.
Inflation is yet to stir the Polish rate setters. NBP governor Adam Glapiński said last week that he still considered that the best scenario is to keep rates unchanged until the end of 2018. The upward revision of the CPI projection was not significant and is not a cause for concern, he said.
According to the latest projection, CPI will remain below the National Bank of Poland (NBP) target of 2.5% in 2017, with a 50% likelihood of growing 1.9%-2%, compared to the previous project of 1.6%-2.3%.
In 2018 and 2019 inflation is now expected to accelerate, however. The new projection has it at 1.6%-2.9% next year and at 1.7%-3.7% in 2019. The previous projection had CPI at 1.1%-2.9% in 2018 and 1.7%-3.7% in 2019.