Poland’s core inflation, an indicator that measures price growth without including prices of food and energy, picked up its growth rate to 3.4% year on year in June (chart) after a gain of 3.3% y/y the preceding month, the National Bank of Poland (NBP) said on July 16.

The increase still keeps the measure within the central bank target range of 1.5%-3.5% after reaching that level in April – the first time since January 2020. Analysts say that, compared to May, prices of services related to foreign tourism and transport services drove core inflation in the sixth month.

Headline CPI growth came in at 4.1% y/y in June, an increase of 0.1pp versus May, the state statistical office GUS said earlier in June.

The inflation outlook is, however, positive.

“Price growth [is] expected to approach the NBP’s target in the third quarter of 2025 and no significant rebound [is] seen in the following quarters,” ING said in a note.

“Parliament has passed a bill extending the electricity price cap through the fourth quarter of 2025, pending the president’s signature. Global conditions also remain disinflationary, with commodity prices – including oil – staying low,” ING also said.

Falling core and headline inflation provide an increasingly compelling rationale for the NBP to step up the easing of monetary policy.

The NBP reduced its reference interest rate by 50bp to 5.25% in May on the back of easing headline inflation and slower wage growth. A cut of 25bp followed in July.

After the summer break – with no monetary policy meeting scheduled in August – the central bank may cut interest rates by as much as 50bp in September, analysts say, citing continued disinflation and the likely enactment of legislation maintaining the net electricity price cap. 

The 2026 draft budget, due around the turn of August and September, is not expected to point to a further increase in the deficit-to-GDP ratio next year. Labour market data should also confirm a gradual easing of wage pressures. 

“Another rate cut of 25bp is anticipated in November, potentially bringing the reference rate to 4.25% by end-2025,” ING said.

Risks to the NBP’s dovish stance include the economic situation in the Eurozone, a possible trade war between the US and the EU, and geopolitical turmoil in Ukraine and the Middle East.