Polish core inflation eases growth to 5.4% y/y in February

Polish core inflation eases growth to 5.4% y/y in February
/ bne IntelliNews
By Wojciech Kosc in Warsaw March 19, 2024

Poland’s core inflation, which measures price growth without food and energy, eased growth to 5.4% year on year in February (chart) after growing 6.2% y/y the preceding month, the National Bank of Poland (NBP) said on March 18.

Core inflation growth thus eased in the 11th successive month in February in line with other easing inflation indicators. CPI growth eased 1.1pp to 2.8% y/y in February, the statistical office GUS said last week. 

Still, Santander Bank Polska said in a comment: “The price momentum in core inflation components – mainly in services – remains high and inconsistent with the inflation target.”

The NBP’s inflation target is 2.5%, with a deviation of 1pp either way.

The NBP is not expected to ease monetary policy soon, as it is waiting for a possible uptick in the inflation rate to arrive in the second half of the year in the wake of the government’s phasing out the cap on electricity prices and the return of the 5% VAT rate on basic foods.

The NBP is currently expected to keep rates unchanged until well in to the second half of the year, with any changes coming only after there is more clarity about the inflation rate’s trajectory following the government’s regulatory decisions. 

In month-on-month terms, core inflation gained 0.5% in February, following an expansion of 0.4% m/m in January, the NBP data also showed.