Polish Inflation Unexpectedly Falls Below Central Bank’s Target

Polish inflation unexpectedly slowed, dipping below the 2.5% mid-point of the central bank’s target range, though economists see it bouncing back later in the months ahead.

Consumer prices rose 2.4% from the previous year in February, following a revised increase of 2.6% for January, data released Monday showed. The median estimate in a Bloomberg survey was for a 2.6% advance. Inflation was 0.5% from January.

The statistics office revised the weighting system used to calculate the consumer price index, reflecting adjustments to household-spending patterns caused by the pandemic. The share of food and non-alcoholic beverages, housing utilities and energy costs rose, while the share of restaurants and hotels, recreation and culture fell.

Polish Inflation Unexpectedly Falls Below Central Bank’s Target

Key Insights

  • The main factor behind the inflation surprise was a drop in fuel costs for personal transport, offsetting higher prices for housing and utilities.
  • But the unexpected dip seems highly unlikely to shift the central bank’s monetary-policy stance. Governor Adam Glapinski said Monday that the chances of a change in interest rates “are close to zero.”
  • With forecasts indicating the slowdown in price growth will be short-lived, Glapinski said the bank would react if there was a risk of excessive inflation or deflation.

What Economists Say

  • “Throughout 2021, average annual inflation will amount to at least 3%, and the risk for this forecast is on the side of a higher reading,” said Monika Kurtek, an economist at Bank Pocztowy in Warsaw

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