Polish CPI grew 18.4% y/y in February (chart), broadly in line with the consensus, Poland’s statistical office GUS showed on March 15.
The reading added as much as 1.8pp to the revised January data, elevating inflation to the highest level in the current inflationary cycle that began in March 2021. From now on, analysts agree, the CPI is to embark on an extended descent that might see the index down at around 10% y/y at the end of the year.
“It is highly probable that inflation in Poland is peaking, as most of the pro-inflationary effects have reached their full potential, despite government interventions regarding energy prices,” Erste said in a comment on the GUS figures.
The February inflation reading will affirm the National Bank of Poland (NBP) in its wait-and-see approach to monetary policy for now. The NBP kept its reference interest rate on hold at 6.75% for a sixth consecutive time earlier this month.
“The coming months will bring a drop in inflation, which will be mainly driven by statistical effects and falling commodity prices. As a result … inflation in Q4 2023 should return to single-digit levels. Due to the tight labour market, core inflation will decline more slowly, and as a consequence, the return of inflation to the NBP target remains a distant prospect,” Bank Millennium said.
Analysts now expect that the NBP will begin to ease monetary policy only at the beginning of 2024.
That said “taking into account the dovish rhetoric of the NBP president, it cannot be ruled out that the decline of CPI inflation to single-digit levels will be a strong argument for the [NBP’s Monetary Policy Board] to tone down rhetoric and consider faster rate cuts,” according to Bank Millennium.
Inflation in February surged on the back of food prices growing more slowly, which the renewed price growth in other major price components did not offset, GUS showed in the breakdown of the data.
Food prices grew 24% y/y in February, the flash estimate said, picking up against a gain of 20.6% y/y in January. Year-on-year segment readings from January were mostly revised since their original publication in mid-February.
Energy prices expanded 22.7% y/y in February after growing a 21.6% y/y the preceding month. Growth in fuel prices also accelerated to 30.8% y/y in February, compared to a gain of 18.8% y/y in January.
In monthly terms, the CPI increased 1.2% in February, after adding a revised 2.5% the preceding month.
Prices of food expanded 1.8% m/m in February after adding 1.9% m/m in January. In the energy segment, prices inched up 0.5% m/m after a revised pick up of 8.4% m/m the preceding month.
In the fuel segment, prices 1.2 m/m after no change m/m in January.