Polish CPI grew 2.6% year on year in June (chart), above the consensus line of 2.5% y/y and 0.1pp above the final May reading, a flash estimate from Poland’s statistical office GUS showed on June 28.

Analysts expect the CPI to accelerate growth in the second half of the year due to the end of anti-inflation regulations from the pandemic era, especially the de-freezing of prices of electricity, gas, and heating that kicks in on July 1.

“We expect CPI inflation to return to the target permanently in the fourth quarter of 2025,” PKO BP said.

The flash reading also points to core inflation – price growth without food and energy – weakening to around 3.7% y/y in June from 3.8% y/y in May. It is only a temporary easing of fundamental inflationary pressures, analysts say. 

“We expect the downward trend to halt or even reverse slightly later in the year as consumer demand recovers,” PKO BP said.

Both headline and core inflation do not provide much solid ground for the National Bank of Poland (NBP) to even consider lowering its reference interest rate from the current 5.75% this year.

The consensus is now shifting for the first cut to take place only in the second half of 2025.

Prices of food and non-alcoholic drinks grew 2.5% y/y in June, picking up after a gain of 1.6% y/y in May, the breakdown of the data showed.

Energy prices fell 1.6% y/y in the sixth month, the decline rate easing 0.2pp versus May. Fuel prices added 1.6% y/y in June, compared to an expansion of 3.6% y/y the preceding month, GUS data also showed.

In month-on-month terms, the CPI added 0.1% in June, according to the flash estimate. Prices of food grew 0.7% m/m. In the energy segment, prices slid 0.1% m/m while falling 2.8% y/y in the fuels segment.