Poland's consumer price index (CPI) grew 2.5% y/y in November, 0.4pp faster than the annual expansion in October, statistics office GUS announced in a flash estimate on November 30.
The reading shows inflation at the highest level since November 2012, while the growth rate also beat consensus, which expected inflation at 2.3% y/y last month. The surging CPI will likely fuel speculation of a shortening timeline for a change in interest rates.
The flash estimate did not contain a breakdown of inflation factors but, writes Erste, the increase “was most likely driven by growing food and fuel prices as commodity prices have been in upward trend for recent couple of months.” Full information on CPI in November will be released on December 11.
With CPI hitting the National Bank of Poland’s (NBP) inflation target, the pressure on rising rates will increase, Erste forecasts.
“Although core inflation remains below 1% at this point, the GDP growth structure – which is consumption-driven, is pro-inflationary. Tightening labour market conditions are likely to increase the pressure further,” Erste wrote. The Austrian bank predicts a rate hike in the fourth quarter of 2018.
Poland’s interest rates have sat at a record-low level of 1.5% for close to three years, and despite the robust economy, a hike is expected no earlier than mid to late 2018.
Poland suffered deflation throughout 2015 and 2016. The MPC's next meeting on rates is scheduled for December 4-5.