The Polish consumer price index (CPI) picked up its expansion rate to 4.9% year on year in September (chart) from 4.3% y/y in August, data from Poland’s statistical office GUS showed on October 15.

The reading is in line with the flash estimate GUS published in late September. The inflation rate continues to linger above the National Bank of Poland’s (NBP’s) target range of 1.5%-3.5%. Analysts now expect the CPI to keep growing until the end of the year, all but preventing the central bank from cutting rates – currently at their longtime high of 5.75% – before mid-2025.

Inflation is accelerating in the wake of growing prices of electricity, gas, and heating after the government phased out the pandemic-era price controls in July. Meanwhile, high wage growth, low unemployment, and the anticipated economic recovery hint at a period of heightened price growth in early 2025, analysts say.

“We expect inflation to remain close to 5% y/y in the coming months, and we may see it rise further at the beginning of the next year,” ING Bank said. 

“The issue of a possible extension of the maximum price for electricity is still unresolved. We do know, however, that the capacity fee will be reinstated and excise duty on cigarettes will increase. According to our forecasts, inflation will peak at the turn of the first and the second quarter of 2025 at around 6% y/y,” ING also stated.

Housing and energy price growth picking up to 9.7% y/y - against a gain of 9% y/y the preceding month - once again drove the headline figure, the breakdown of the data showed. 

Elsewhere, food prices accelerated expansion to 4.7% y/y in the ninth month after a gain of 4.1% y/y in August. 

Prices in another major segment, culture and recreation expanded by 5.4% y/y in September, increasing the growth rate versus a gain of 4.1% y/y the preceding month, GUS data also showed.

Meanwhile, transport saw prices ease further to -1.5% y/y in September after a fall of 1.4% y/y in August.

The core inflation component accelerated growth to an estimated 4.3% y/y in September from 3.7% y/y in August, analysts say. The NBP will publish an official core inflation reading on October 16.

In month-on-month terms, the CPI inched up 0.1% in September, the same monthly expansion rate as in August.

The September CPI reading does not change the monetary policy outlook for Poland, according to Bank Millennium - even though a dovish shift is already happening elsewhere.

“Rate cuts by the most important central banks and monetary authorities in the region will put pressure on the resumption of the interest rate cuts cycle by the [National Bank of Poland],” Bank Millennium said.

“Rate cuts may happen sooner or later but in our opinion, this will depend primarily on the situation in the labour market. Regardless of the timing, it does not seem to us at the moment that the space for cuts in 2025 will be greater than 100 basis points,” Bank Millennium also said.

After aggressive rate cuts in September and October last year that left the central bank’s reference interest rate at 5.75%, the NBP has held in each of the rate-setting meetings since.