Poland’s CPI growth eased to 3.1% year on year in July from 4.1% y/y the preceding month, the country’s statistical office GUS said in a flash estimate on July 31. (chart)

The July flash reading marks the first time since June 2024 when the price growth index landed within the National Bank of Poland’s (NBP’s) target band of 1.5%-3.5%. The flash estimate still came above the consensus line of 2.9% y/y.

Price growth in Poland is expected to moderate further in August before settling for longer. “We estimate that inflation will continue to decline in August, moving closer to the NBP’s target, with relative price stability expected in the following months,” ING said in a note.

Falling inflation rate suggests more interest rate reductions from NBP, with uncertainty pending over timing, analysts say.

“A sustained return of inflation to the National Bank of Poland’s target supports the case for further monetary easing. However, the persistence of core inflation, combined with an expansionary fiscal stance, calls for caution in the pace of rate cuts,” Bank Millennium said in a note.

“In our view, a further 25bp reduction is possible in September, though slightly higher inflation readings in July and August could prompt the NBP to delay the next move until November, when the new macroeconomic projection is released,” Bank Millennium also said.

The NBP's reference interest rate is currently at 5% after the central bank administered two cuts, worth a combined 75bp in May and July.

Prices of food and non-alcoholic drinks grew 4.9% y/y, unchanged from the flash reading for June, the breakdown of the data showed. Meanwhile, energy prices expanded 2.4%, a massive drop from a gain of 12.8y/y in June. Fuel prices slid 6.8% y/y after falling 10% y/y the preceding month.

In monthly terms, the CPI grew 0.3% in July after growing 0.1% m/m the preceding month, GUS data also showed. Prices of food declined 0.6% m/m while energy prices added 1.1% m/m. Fuel prices grew 3.5k% on the month.