Poland’s core inflation, which measures price growth without food and energy, eased to 6.9% y/y in December (chart), the National Bank of Poland (NBP) said on January 16.

Core inflation growth thus eased in the ninth successive month in December, as Poland is expected to enter a period of fast disinflation in the next few months. CPI growth eased 0.3pp to 6.2% y/y in December, the statistical office GUS said earlier this week. 

The inflation drop and the ongoing – if coming to an end – economic slowdown prompted the NBP to cut its reference interest rate by a combined 100bp to 5.75% in September and October.

"We assume that in the coming months, there may be further slight declines in core inflation, which will reach approximately 5% y/y by the end of the first quarter. Afterward, it is expected to remain close to this level until the end of the year,” Santander Bank Polska said in a comment.

The National Bank of Poland is not expected to ease monetary policy soon, as it waits for the new CPI and GDP growth projections, due in March.

Overall, the NBP is currently expected to cut rates by up to 100bp to 4.65% throughout 2024, with caveats attached to the actual inflation trajectory especially once – and if – the government decides to extend price-controlling measures on food and electricity.

In m/m terms, core inflation gained 0.3% in December, following no change m/m the preceding month, the NBP data also showed.