Poland's consumer price index (CPI) grew 1.8% y/y in August, 0.1pp faster than in June, statistics office GUS announced in a flash estimate on August 31.

The reading shows that the inflation rate picked up speed for a second straight month. However, the overall growth of the CPI remains subdued, and it will take a much more pronounced pick-up to push the Monetary Policy Board (MPC) from its dovish stance. 

Poland’s interest rates have sat at a record-low level of 1.5% for 28 months, and despite the robust economy, a hike is expected no earlier than late 2018, due to concern that inflationary pressure remains tepid. Poland suffered deflation throughout 2015 and 2016. The MPC's next meeting on rates is scheduled for September.

The current moderate tempo of inflation is in line with rate setters’ opinion that the surge above 2% around the turn of the year was a temporary phenomenon caused by external drivers, mainly the stabilisation of oil prices and the low base from 2016. 

The CPI dynamics remain supportive of the MPC's stance that inflation will not cross the National Bank of Poland's (NBP) inflation target of 2.5% this year. However, some analysts see the current structure of GDP growth –with private consumption in the driving seat – as “pro-inflationary.”

In monthly terms, CPI fell 0.2% in August, the same rate as in the previous month. The estimate does not contain a breakdown of inflation drivers. Full information on CPI in May will be released on September 11.