Key Moments
- Polish headline CPI inflation accelerated to 3.0% year-on-year in July from 2.5% in June, driven largely by a sharp rise in fuel prices.
- Core inflation metrics, including the NBP’s main core indicator and several alternative measures, also moved higher in July.
- Commerzbank views the shift as negative for the Polish Zloty (PLN), as inflation is rising faster than the National Bank of Poland (NBP) is adopting a more hawkish stance.
Repricing Policy Expectations for the Polish Zloty
Commerzbank strategist Tatha Ghose notes that both headline and core inflation in Poland have picked up again, with seasonally adjusted monthly readings now clearly above the inflation target. As a result, earlier suggestions from National Bank of Poland (NBP) Governor Adam Glapinski regarding the possibility of rate cuts are now regarded as outdated. However, because the central bank is tightening its stance more slowly than inflation is accelerating, Commerzbank sees this dynamic as unfavorable for the Polish Zloty (PLN).
Inflation Dynamics: Headline and Core Measures
The latest data confirm that consumer price pressures in Poland have intensified:
| Indicator | June (y/y) | July (y/y) | Comment |
|---|---|---|---|
| Headline CPI inflation | 2.5% | 3.0% | Acceleration confirmed, in line with consensus |
| Fuel prices – monthly change | – | 13.9% month-on-month | Main driver of the headline increase |
| Fuel inflation – annual rate | 5.3% year-on-year | 15.8% year-on-year | Jump in annual fuel inflation |
| NBP main core index (ex food, drinks, fuel, energy) | 3.0% year-on-year | 3.1% year-on-year | Core moved higher |
| 15% trimmed mean | 2.8% year-on-year | 2.8% year-on-year | Unchanged, but other measures rose |
| Core ex regulated prices | – | 2.8% year-on-year | Accelerated |
| Core ex most volatile prices | – | 3.4% year-on-year | Accelerated |
According to the report, the move in headline CPI to 3.0% year-on-year in July from 2.5% year-on-year in June was “overwhelmingly fuel-driven,” with passenger fuel prices surging by 13.9% month-on-month and pushing annual fuel inflation to 15.8% year-on-year from 5.3% year-on-year in June. Commerzbank highlights that “core inflation also moved in the wrong direction.”
The bank points out that Poland’s central bank reported its main core index, which excludes food, drinks, fuel and energy, increased to 3.1% year-on-year in July from 3.0% year-on-year in June. The 15% trimmed mean remained at 2.8% year-on-year, but other core indicators rose, including the measure excluding regulated prices, which climbed to 2.8% year-on-year, and the index excluding the most volatile prices, which advanced to 3.4% year-on-year.
Seasonally Adjusted Pressures Undermine Rate-Cut Signals
Commerzbank emphasizes that the year-on-year readings are not the main concern. The analysis stresses that “the more relevant seasonally-adjusted month-on-month rates of increase have re-accelerated sharply during June and July and are now clearly above-target.” On this basis, the bank argues that NBP Governor Adam Glapinski’s earlier suggestion that rate reductions could follow “should now be treated as obsolete.”
Implications for the Polish Zloty
The shift in inflation dynamics relative to the pace of the NBP’s policy adjustment is seen as unfavorable for the currency. As Commerzbank concludes, “The development is negative for the zloty because inflation is accelerating faster than NBP is turning hawkish; NBP will at best signal unchanged rates for longer, which may not satisfy the FX market.”
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