Poland’s consumer price index (CPI) rose to 5.3% year on year in January (chart), up from 4.7% in December, data from the country’s statistical office GUS showed on February 15.

Inflation remains above the National Bank of Poland’s (NBP) target range of 1.5%-3.5%, dimming prospects for any monetary easing before mid-2025, analysts say. The NBP’s key interest rate has stood at a two-decade high of 5.75% since October 2023.

The January increase was driven by higher prices for food, fuels, tobacco products, alcoholic beverages, and housing, analysts say. However, they note that these gains do not necessarily indicate a resurgence in underlying inflationary pressures.

“An upside surprise doesn’t necessarily signal mounting inflationary pressure. It’s worth recalling that December’s inflation figures came in lower than expected,” Santander Bank Polska said in a comment.

“Food prices may be an exception. Several price shocks have hit the sector recently, and wholesale agricultural prices saw a sharp jump in December,” Santander also said.

Analysts expect inflation to remain elevated throughout 2025.

“January’s inflation surprise raises the starting point for this year’s price growth but doesn’t fundamentally alter its trajectory. Over the next three months, CPI will continue climbing, peaking at around 5.7% y/y in March,” Bank Millennium said.

“Spring will bring a gradual decline, but inflation is set to rise again in July, driven in part by the reinstatement of the capacity fee and higher electricity prices. By year’s end, the CPI will land between 4.5% and 5% y/y, depending on government decisions on electricity prices beyond September,” Bank Millennium also said.

Not all analysts agree on where inflation will end the year.

“We expect that CPI inflation may rise further in the coming months, and that from Q2 it will start to decline systematically and return to the broadly understood inflation target in the second half of 2025,” PKO BP said.

Food and non-alcoholic beverages saw prices climb 5.5% y/y in January, accelerating by 0.7 percentage points from December.

Housing costs, however, saw slower growth, easing to 8.8% y/y from 10.1% the previous month. The transport segment returned to positive territory, rising 0.3% y/y in January after falling 3.3% y/y in December.

On a month-on-month basis, CPI rose 1% in January after remaining flat in December, GUS data showed.

Despite the jump, analysts do not expect the reading to alter the NBP’s monetary policy outlook.

“We expect the National Bank of Poland [NBP] to maintain its hawkish stance, keeping interest rates unchanged in the first half of 2025. A more pronounced decline in inflation should begin in July,” ING said.

“We anticipate the NBP will cut rates by 50bp in September, followed by two additional 25bp reductions in October and November, bringing the reference rate down to 4.75% by year-end,” ING also said.