Inflation increases in June

Inflation rose to 2.6% in June, up from May’s 2.5%. Looking at the details of the release, prices for food and non-alcoholic beverages plus housing and utilities increased at a faster rate. Additionally, the cost of clothing and footwear declined at a sharper pace. The trend pointed down, with annual average inflation coming in at 5.4% in June (May: 6.1%). Meanwhile, core inflation dipped to 3.6% in June (May: 3.8%). Lastly, consumer prices increased 0.10% in June over the previous month, matching May's reading.

Adam Antoniak, senior economist at ING, commented on the outlook: “We expect the headline inflation rate to rise above the upper limit of acceptable deviations from the [Central Bank’s] inflation target in July, mainly due to the partial withdrawal of the energy shield. […] Our current forecasts indicate that consumer inflation will trend upwards and peak (probably above 6% YoY) in March next year. In such an environment, the [Monetary Policy Committee] will keep interest rates unchanged in the coming months, and the first cut may not come until the second quarter of next year when we could see some room for monetary easing of 75bps.”

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