Poland’s PPI growth accelerates to 14.2% y/y in December

Poland’s PPI growth accelerates to 14.2% y/y in December
By Wojciech Kosc in Warsaw January 24, 2022

Poland's producer price index (PPI) grew 14.2% y/y in December following a revised expansion of 13.6% y/y the preceding month, the country’s statistics office GUS said on January 21.

The PPI climbed to the highest point since the late 1990s and the growing prices in the industrial sector will be reflected in higher consumer prices, driving up the CPI, the headline inflation index. In monthly terms, the PPI grew 0.8% in December after a revised 1.4% m/m the preceding month, GUS data also showed.

The PPI inflation may be about to peak, analysts say. 

"The structure of producer price growth shows that the fuel price shock is starting to fade and the price dynamics in this category is slowing down. If there are no more commodity shocks, the upward pressure on retail goods prices may come to an end," state-controlled bank PKO BP said.

For now, the still strong inflation readings continue to drive the National Bank of Poland’s monetary tightening.

The NBP already increased interest rates three times in October-January from an-all time low of 0.1% to 2.25%. The target level is currently seen at 3% at least in 2022, although the NBP has recently hinted that even 4% is not out of the question.

The PPI data breakdown shows that prices in the most-weighted manufacturing segment grew 13.7% y/y in December, the same as in the preceding month.

Mining and quarrying prices grew 22.5% y/y in December (November was +26.1% y/y following revision).

Electricity, gas, and utility prices expanded 16.2% on the year in December after a revised expansion of 10.4pp in the preceding month. The water supply segment saw prices ease 0.3pp to 4% y/y.

The index declined 0.7% m/m in mining and quarrying while growing 0.2% m/m in manufacturing. The index also expanded 5.4% m/m in the utility segment and 0.2% m/m in water supply.