Poland’s core inflation, an indicator that measures price growth without food and energy, eased to 3.8% year on year in May (chart) after an expansion of 4.1% y/y the preceding month, the National Bank of Poland (NBP) said on June 17.

Core inflation growth eased for the 14th successive month, broadly in line with other easing inflation indicators, but remains excessively high, analysts say. In month-on-month terms, core inflation was 0.1% in May, following 0.7% m/m in April, the NBP data also showed.

“In our opinion, [the y/y] decline is partly due to seasonality while core inflation remains above the inflation target and does not provide any arguments [for the NBP] for interest rate cuts,” Bank Millennium said in a comment.

Analysts expect core inflation to stabilise at around 4% y/y in the coming months as the high base effect from 2023 will be fading.

In that context, the NBP is unlikely to ease monetary policy soon. The NBP is expected to keep rates unchanged until late this year or early 2025, with any changes coming only after there is more clarity about the inflation rate’s trajectory.

Other than watching core inflation, the central bank is also waiting for a possible uptick in the headline inflation rate to arrive in the second half of the year in the wake of the government’s phasing out the cap on electricity prices.

CPI growth picked up 0.1pp to 2.5% y/y in May, the statistical office GUS said earlier this month. The NBP’s inflation target is 2.5%, with a deviation of 1pp either way.