Polish CPI expanded 6.6% year on year in October (chart), data from Poland’s statistical office GUS showed on November 15.

The reading arrived 0.1pp above the flash estimate published by GUS in late October, thus confirming inflation’s easing by 1.6pp compared to September. The CPI index remains above the National Bank of Poland’s (NBP’s) target of 1.5%-3.5% but appears on track to near the target in 2024.

When CPI will reach the target is however subject to a number of factors that have long remained unclear, analysts say. 

“The inflation outlook is exceptionally uncertain due to the lack of any final decision on the zero VAT rate on food and support measures in the energy market, as well as a decision on electricity and gas prices for households in 2024,” ING said in a comment. 

Expectations are for the VAT rate on food to be raised from January 1, 2024, and electricity prices to remain capped until the middle of next year.

“In such a scenario, average annual CPI inflation in 2024 could be as high as 6%, leaving no room for interest rate cuts,” ING also said. 

The NBP’s reference interest rate is currently at 5.75% after combined cuts of 100bp carried out in September and October.

The October CPI reading suggests a further slowdown in the core inflation growth rate, which, analysts say, eased to around 8% y/y in the tenth month from 8.4% y/y in September. Actual core inflation figures are due on November 16.

Prices in the most-weighted food and non-alcoholic drinks segment drove the easing of the index in October, the breakdown of GUS data showed. 

Expanding 8% y/y in October, food price growth still eased in the tenth month after a gain of 10.4% y/y in September.

Price growth also eased in the second most-weighted segment of housing and energy, growing 8.3% y/y in October after an increase of 9.5% y/y in September.

The next most-weighted segment, transport, saw prices accelerate fall to 7.9% y/y in the ninth month after a decrease of 2.8% y/y in September, GUS data also showed. 

Prices in another major segment, culture and recreation, added 7.5% in October following a gain of 8.6% y/y the preceding month.

In month-on-month terms, the CPI grew 0.3% in October after falling 0.4 m/m in September.