According to preliminary data from Statistics Poland, inflation in April rose to 3.2% year-on-year. This was above market expectations and represents another signal that price pressure in the Polish economy has increased significantly.
After inflation rose to 3.0% in March, the April reading suggests that Poland may again find itself among economies where price growth is more persistent than in Western Europe. The key question now is whether April will prove to be the inflation peak of 2026.
The rise in inflation to 3.2% was surprising, as most market participants had expected a decline towards 2.9%. Fuel prices fell by 1.8% month-on-month, but food prices increased by 0.5%. Electricity and gas prices rose by the same amount.
This suggests that cost pressure is beginning to move beyond fuel alone and is spreading to other categories. That is a worrying signal, as a similar mechanism was visible during previous inflation waves.
The impact of tax cuts on fuel prices proved limited in the GUS data. In April, fuel prices fell by 1.8%, but in March they had surged by 15.4%. That jump was one of the reasons why inflation rose sharply from 2.1% in February to 3.0% in March. As a result, April’s relief at petrol stations was not enough to fully reverse the earlier price impulse.
The most important element of the tax changes was the temporary reduction of VAT on fuel from 23% to 8%, along with a cut in excise duty to the minimum level allowed in the European Union. The lower rates came into force on 31 March, meaning that the April reading already reflects the full effect of these measures. The package also included a maximum fuel price mechanism to ensure that lower taxes were reflected in retail prices.
Since then, however, the situation at petrol stations has remained volatile. Fuel prices depend not only on domestic regulations, but also on oil prices and the geopolitical risk premium. Oil remains the key uncertainty for the future inflation path. If the situation in the Middle East stabilises, fuel-related pressure may gradually weaken.
The next meeting of the Monetary Policy Council will take place next week. Under current conditions, the most likely scenario is that interest rates will remain unchanged. The last rate cut took place on 4 March, already after the outbreak of the conflict in the Middle East. Since then, the room for further monetary easing has clearly narrowed.
The Council is now in wait-and-see mode. It will closely monitor incoming data, especially inflation, fuel prices and the geopolitical situation. In Poland, unlike in the eurozone, the risk of interest rate hikes appears limited. At the same time, further rate cuts will probably have to wait.
Developments in US-Iran relations will also be important, as will whether oil transport through the Strait of Hormuz continues without disruption.
Inflation remains the biggest concern for Polish retail investors. According to the latest eToro Retail Investor Beat survey, 27% of respondents see inflation as the main threat to their investments, compared with 24% in the previous quarter. Inflation has therefore overtaken international conflict, which is currently cited by 25% of respondents.
The April reading gives reasons for caution. Higher fuel and energy prices may increasingly feed through into the prices of other goods and services in the coming months. The Polish economy has already shown that during periods of elevated cost pressure, inflation can rise more strongly than in Western European countries.
The key question now is whether April marks the peak of inflation this year — or merely another stage in its renewed acceleration.
