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Poland Inflation May 2021

Poland: Inflation increases to over one-year high in May, driven by low base effect

Consumer prices rose 0.30% from the previous month in May, moderating from the 0.80% rise logged in April. May’s result marked the softest rise in prices since December 2020 amid falling prices for transport.

Inflation rose to 4.7% in May from April’s 4.3%, marking the highest print since February 2020 chiefly due to the low base effect. Moreover, the trend pointed up mildly, with annual average inflation coming in at 3.2% in May (April: 3.0%). Core inflation ticked up to 4.0% in May, from the previous month’s 3.9%.

While commenting on the outlook for inflation, Rafal Benecki and Dawid Pachucki, economists at ING, highlighted it could remain elevated ahead:

“In our opinion, inflation in Poland will not fall back any time soon. The disruption in supply chains may last until next year, when the demand-supply imbalance will be further amplified by an expected rebound in household consumption and Keynesian impulses in Poland, from the EU’s Recovery Fund and the Polish Deal. This should sustain and may even accelerate core inflation in Poland in late 2022.”

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