Polish core inflation growth picks up 0.6pp to 6.7% y/y in February

Polish core inflation growth picks up 0.6pp to 6.7% y/y in February

By bne IntelliNews March 17, 2022

Poland’s core inflation, which measures price growth without food and energy, increased 0.6pp to 6.7% y/y in February, the National Bank of Poland (NBP) said on March 16.

Headline inflation in Poland has been elevated for months, with CPI growth at 8.5% y/y in February. While easing from 9.4% y/y recorded the preceding month, the slowdown is only temporary, as market shocks due to the war in Ukraine will bring back accelerating price growth from March on, analysts say.

Poland’s Monetary Policy Council, the rate-setting body of the NBP, has increased the basic rate from 0.1% to 3.5% in six consecutive hikes in October – March.

“We believe that cost pressures will continue to drive up core inflation, which may extend above 8% y/y in the second half of the year,” Poland’s state-controlled bank PKO BP said in a comment.

Core inflation will remain high until 2023, the bank added.

The war is pushing up prices of commodities and basic raw materials, leading to a revision of the inflation outlook. The NBP now expects inflation to reach even 12.2% in 2022, a significant change compared to the 5.1%–6.5% expected in the central bank’s previous price growth projection, released in November.

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Data

Polish inflation rate eases to 4.9%, raising hopes for faster decline to central bank target

Poland’s consumer price index grew 4.9% year on year in February (chart), the same expansion rate as the heavily revised – due to the annual changes in the inflation basket – gain of 4.9% y/y the preceding month.

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