Polish CPI growth came in at 10.1% y/y in August (chart), slightly above the consensus line of 9.9% y/y and 0.7pp below the July reading, a flash estimate from Poland’s statistical office GUS showed on August 31.

Inflation did not fall to single digits in August, a precondition for an interest rate cut set by the governor of the National Bank of Poland this summer. Price growth is all but certain to descend below 10% y/y in September, analysts say.

“Our CPI forecast for September is 8.9% y/y. By the end of this year, inflation could decrease slightly below 7% y/y,” Santander Bank Polska said in a comment.

Inflation will then take a lot longer to close in on the NBP’s target of 2.5% than it has taken it to descend from the peak of over 18% y/y in February to around 10% y/y now.

“In the following year, the downward trend will ease significantly, influenced by the anticipated economic recovery, high wage dynamics, expansive fiscal policy, as well as the rollback of energy price freezes and the zero VAT on food,” Santander Bank Polska added.

For now, the falling inflation rate is supportive of the NBP’s plans for an interest rate cut taking place possibly as soon as September or October.

The NBP has kept its reference interest rate at a 20-year high of 6.75% since September 2022.

Food prices grew 12.7% y/y in August, easing from July’s expansion of 15.6% y/y, the breakdown of the data showed. Energy prices expanded 13.9% y/y in August, compared to a gain of 16.7% y/y the preceding month. 

Fuel prices decreased 6.1% y/y in August after falling 15.5% y/y in July, GUS data also showed.

In m/m terms, the CPI remained unchanged in August after easing 0.2% m/m in the seventh month.

Prices of food fell 1% m/m in August. In the energy segment, prices did not change m/m, while adding 1.9% y/y in the fuel segment.