Poland's producer price index (PPI) expanded 2.2% y/y in January, data from statistics office GUS showed on February 18.

The outcome sees PPI inflation accelerate 0.1pp in comparison to the revised annual reading recorded for December. The moderate PPI level corresponds to weak inflation, which eased to just 0.9% y/y in January, GUS said earlier this month. Given fast-rising wages and fast economic growth in the fourth quarter and 2018 overall, inflation remains stubbornly weak.

With CPI growth lingering well below the Monetary Policy Council (MPC) red line of 2.5%, interest rates in Poland look set to remain at a record-low 1.5% until the end of 2019 at least.

PPI increased 1.9% y/y in manufacturing while growing 1.6% y/y in the water supply sector in January. Mining and quarrying saw prices advance 2.1% y/y. The utility sector recorded price growth of 4.5% y/y.

“The PPI index should remain at levels close to January in the coming months while falling to below 2% y/y in the summer due to the high statistical base from the previous year. The impact of increases in energy prices remains a factor of uncertainty,” Bank Millennium said in a comment on the GUS figures.

Month to month, Polish PPI inched up 0.2% in January, compared to a decline of 0.9% m/m in December.

Prices grew 0.5% m/m in mining and quarrying while remaining unchanged in manufacturing. In the utility segment, PPI gained 1.4% m/m. Factory gate prices also grew 0.3% m/m in the water supply sector.

Prices in the construction sector grew 3.7% y/y and 0.2% m/m in January, GUS also said.