Polish CPI grew 17.2% y/y in September in yet another surprise acceleration after the pace of price growth already shocked analysts the preceding month, the statistical office GUS revealed in a flash estimate on September 30 (chart).

The reading smashed market expectations, which assumed a CPI expansion of 16.5% in September, which would have been only a slight pick-up against the 16.1% y/y growth officially recorded in August.

“Data indicate that inflation shows no signs of abating,” Bank Millennium said in a comment on the GUS release.

“Price pressure remains high and controlling inflation will require a marked cooling of demand,” the bank added.

The flash estimate will present the National Bank of Poland with the dilemma of whether to tighten monetary policy further at a time when the economy is already slowing markedly.

Analysts now say that the NBP could hike its reference interest rate even by 50bp to 7.25% on October 5, twice the increase expected before the flash inflation estimate shocker.  

Analysts also keep warning that the government’s pressing on with a loose fiscal policy in the run-up to the parliamentary election in autumn of 2023 will make containing inflation more difficult.

The increase in the inflation rate came on the back of sharp growth in all major components, GUS showed in the breakdown of the data. 

Food prices grew 19.3% y/y in September, the flash estimate said – a pick up against a gain of 17.4% y/y in July.

Energy prices ballooned 44.2% y/y in September after growing 40.3% y/y the preceding month. 

Only fuel prices did ease growth, albeit to a robust 18.3% y/y in the ninth month. That came after an increase of 23.3% y/y in August and owed to decreasing prices on world oil markets.

As headline inflation rose, its core component – prices without energy and food – also accelerated growth to an estimated 10.7% y/y, the highest on record, analysts say.

In monthly terms, the CPI increased 1.6% in September, twice the monthly expansion rate of 0.8% m/m recorded the preceding month.

Prices of food and non-alcoholic drinks accelerated growth by 0.1pp to 1.7% m/m in September. 

In the energy segment, price growth retained its fast expansion rate of 3.7% m/m. 

Fuel prices eased their monthly fall, sliding 2.1% m/m after decreasing 8.3% m/m in July, again on the back of falling oil prices worldwide.