Poland’s consumer price index (CPI) rose 4% year on year in May (chart), easing from 4.3% y/y the preceding month, data published by the national statistics office GUS on June 13 showed.

The official May reading is also 0.1pp below GUS’s flash estimate published at the end of May. Although inflation remains above the National Bank of Poland’s (NBP) target range of 1.5%-3.5%, price growth easing steadily is expected to strengthen the central bank’s recently dovish outlook on monetary policy.

The NBP delivered a first rate cut in two years in May, slashing its reference interest rate by 50bp to 5.25%. Analyst consensus is for rates to drop by 50–75bp this year and by a further 100bp in 2026. 

“Today’s data support the case for [more] interest rate cuts, but looser fiscal policy and the government's likely reluctance to tighten the budget may prompt the central bank to act more cautiously,” Bank Millennium said in a note. 

The government, facing a new adversarial president from August – after opposition’s candidate Karol Nawrocki beat Prime Minister Donald Tusk’s favourite Rafał Trzaskowski – is expected to adopt a looser than expected fiscal policy in the run up to the general election in 2027.

“A rate cut in July remains possible, as Q2 CPI inflation is expected to be over 1pp below the NBP’s February forecast, with core inflation also falling roughly 0.8pp short,” Bank Millennium also said.

Core inflation, which excludes food and energy, is estimated to have eased growth rate to around 3.2%-3.3% y/y in May, down from 3.4% in April, analysts say.

The slowdown in the headline figure was driven mainly by fuel prices, which dropped 11.4% y/y in May after retreating 8.3% y/y the preceding month, GUS showed in the breakdown of May data.

Prices of food and non-alcoholic beverages moved in opposite direction, gaining 5.5% y/y in May, adding 0.2pp to the April reading.

Elsewhere, housing and energy prices grew 10.6% y/y in the fifth month after a gain of 10.8% y/y in April. Prices in the transport segment retreated 7.2% y/y in May after a fall of 5.6% y/y the preceding month.

Meanwhile, prices in recreation and culture added 3.4% y/y in May, following an increase of 3.6% y/y in April, GUS data also showed.