Poland Inflation

Inflation accelerates in July from June

Latest reading: Consumer prices were up 3.0% on a year-on-year basis in July, following a 2.5% increase in the prior month. As such, inflation inched up closer to the ceiling of the Central Bank’s 1.5–3.5% tolerance range. The uptick was chiefly driven by the removal of fuel price caps early in the month and the reinstatement of a 23% VAT rate on motor fuels, up from the temporary 8% rate. Relative to the prior month's data, there were higher price pressures for transport and fuels for personal use (+15.8% vs +5.3% in June). In contrast, there were reduced price pressures for food and non-alcoholic beverages (-0.4% vs -0.2% in June) and electricity, gas and other fuels (+4.0% vs +4.8% in June). Finally, consumer prices rose 0.80% in July in month-on-month terms, following a 0.50% decline in the prior month.

Panelist insight: ING’s Rafal Benecki and Adam Antoniak commented: “Our baseline scenario assumes that, as in the initial phase of the Middle East conflict, higher fuel costs will have only limited spillover effects on the prices of other goods and services, with no significant second-round inflationary pressures emerging. The key uncertainty remains the duration of the conflict and the associated fuel shock. The longer fuel prices remain elevated, especially in the absence of meaningful government support measures, the greater the risk that businesses will seek to pass higher costs on to consumers. That said, slowing nominal wage growth and the squeeze on household purchasing power from higher fuel spending should continue to restrain demand and limit the scope for broader price increases.”

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