Poland's consumer price index (CPI) grew 2.9% y/y in July, adding 0.3pp to the annual reading from June, statistics office GUS announced in a flash estimate on August 1. Inflation in July was the highest since October 2012.
August was the sixth month in a row in which price growth accelerated in Poland, exceeding the 2.5% target of the National Bank of Poland for a second month straight. That is expected to change the mood of discussions in the central bank’s Monetary Policy Council (RPP) in the coming months, especially if predictions of some analysts for the pick-up to become steeper in the second half of the year and into 2020 prove right.
For now, the consensus remains that monetary policy makers will continue keeping Poland’s interest rates at record low 1.5% at which they have lingered for over four years now. With CPI on the rise, however, the RPP’s hawks will gain firmer ground on which to push for tightening.
Broken down by main segments, growth in prices of food and non-alcoholic drinks drove CPI expansion in July, expanding 6.8% y/y. Prices of fuels for private means of transport moved up only 0.7% y/y. Prices of energy retreated 1% y/y.
In monthly terms, CPI did not change. Prices of food and non-alcoholic drinks grew 0.3% m/m. Prices of fuels for private means of transport fell 1.6% on the month while prices of energy stayed flat.