Polish CPI grew 6.8% y/y in October, the annual growth rate picking up 0.9pp versus the preceding month, statistical office GUS said on November 15.
A 21-year high reading confirms the flash estimate, which GUS published early this month. The ongoing surge in consumer prices – which is yet to peak, analysts say – has spurred the National Bank of Poland (NBP) into action twice already, raising interest rates from their all-time low of 0.1% to 1.25% in October and November.
The accelerating price growth will likely enforce a longer tightening cycle. Analysts currently expect interest rates to climb to 1.5-2% during 2022.
“The supply shock is spreading all over the economy,” Poland’s state-controlled bank PKO BP said in a comment.
“Inflationary pressure is wide and the CPI is boosted by all of its main components: energy, fuel and food prices, as well as core inflation,” PKO BP said. Core inflation came in at an estimated 4.5% y/y in November from 4.2% y/y the preceding month.
The price of fuel jumped 33.9% y/y in October, adding 5.3pp versus September, the breakdown of the data showed. Transport prices – of which fuels are a part – grew 22.1% y/y overall, picking up 3.6pp versus September.
Food prices increased 5% y/y in the tenth month, compared to a growth of 4.4% y/y in September. Housing and energy prices added 9% y/y in October versus 7.2% y/y the preceding month.
Overall, goods prices went up 6.8% y/y in October after growing 5.6% y/y in September. Services price growth came in at 6.8% y/y as well, adding 0.2pp.
The outlook for inflation until the first quarter next year is that of growth. With that, there will come more monetary tightening, analysts say.
“The 7% y/y threshold is likely to break in November already and price growth will peak at 8.2% y/y in February, in our opinion. That will increase pressure on the [central bank] to raise interest rates further. We are going to see a hike of 50bp in December already,” Santander Bank Polska said.
In monthly terms, CPI expanded 0.7% in October, with the growth rate picking up 0.4pp versus September, GUS also said.