Polish CPI grew 2% y/y in July, the statistical office GUS reported on August 14.

The reading sees inflation maintain the growth rate seen in June, in line with consensus and GUS’ flash estimate published in late July.

The stabilisation of price growth in July makes it only less likely that Poland’s Monetary Policy Council (MPC) - very dovish recently anyway - will consider any policy change in the immediate future.

The combination of fast economic growth with only moderate inflation – which so far has been largely unaffected by fast-rising wages – is perfect for Poland, the National Bank of Poland (NBP) governor and chairman of the MPC Adam Glapinski said last month after the council left interest rates unchanged for the 40th month in a row. That is expected to be the pattern until the end of 2019, Glapinski added.

At 2% y/y, price growth meets the most recent inflation projection of CPI at 1.5%-2.1% in 2018. Analysts now predict inflation is about to recede to around 1.5% from August onward because of the high base effect.

The annual CPI growth in July was driven by rising prices of food and non-alcoholic drinks, which became 2.2% more expensive in annual terms in July. A growth of 10.1% y/y in prices in the transport sector – including fuel prices ballooning 18% y/y – also contributed.

Most other segments also recorded price growth in July, except for textiles and shoes, where prices dropped 4.2% y/y, and communications with a price fall of 1.7% y/y. Prices also fell in the lump sector of “other goods and services” by 1.6 y/y in July.

In monthly terms, CPI fell 0.2% in July, compared to growth of 0.1% m/m in June.