Poland's consumer price index (CPI) grew 2% y/y in July, retaining the expansion rate seen in June, statistics office GUS announced in a flash estimate on July 31.
The reading is in line with market consensus, keeping inflation at the highest point since December. However, price growth is expected to moderate back to around 1.5% in the coming months, according to Erste.
“We expect inflation to begin to move toward the lower bound of the inflation target at 1.5%, due to the base effect. Higher than expected harvest of fruits and vegetables, will most likely have a negative impact on the food prices growth in coming months,” Erste wrote.
“The expected recovery of headline inflation in 3Q18 did not fully materialize and inflationary pressure still remains limited in the economy,” the Austrian bank added.
That is the outlook of the Monetary Policy Council as well, which expects inflation to remain moderate and interest rates to linger at a record low of 1.5% until the end of 2019 at least.
“If there is no significant acceleration in wage growth that will push up core inflation, the Council will refrain from hiking interest rates,” Bank Millennium wrote.
Growth in prices of fuels for private means of transport drove CPI in July, jumping 18.7% y/y, data showed. Prices of food and non-alcoholic drinks grew 2.1% y/y in July while prices of energy expanded 1.8% y/y.
In monthly terms, CPI fell 0.1%. Prices of food and non-alcoholic drinks declined 0.7% in July while prices of energy inched up 0.1% m/m. Prices of fuels for private means of transport grew 1.4% on the month.