Polish CPI expanded 4.2% year on year in July (chart), slightly below the consensus line of 4.4% y/y but still 1.6pp above the final June reading, a flash estimate from Poland’s statistical office GUS showed on July 31.

The reading is in line with analysts’ expectations for 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 went into effect in on July 1.

Boosted by rising energy prices, inflation is expected to remain at an “elevated level in the next 12 months,” ING said in a comment.

“We forecast that by the end of 2024, inflation will fluctuate in the range of 4%-5% y/y and will peak at around 5%-6% y/y in the first quarter of 2025,” ING also said.

The flash reading also points to core inflation – price growth without food and energy – remaining at around 3.6%-3.7% y/y in July, analysts say. 

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 3.2% y/y in July, picking up from a gain of 2.5% y/y in June, the breakdown of the data showed.

Energy prices surged 10% y/y in the seventh month, following a decline of 1.6% y/y in June. Fuel prices eased growth to 1.2% y/y in July, compared to an expansion of 1.6% y/y the preceding month, GUS data also showed.

In month-on-month terms, the CPI added 1.4% in July, compared to a gain of just 0.1% m/m the preceding month, according to the flash estimate. 

Prices of food declined 0.5% m/m. Energy prices jumped 11.8% m/m while remaining unchanged m/m in the fuels segment.