Per preliminary data from the Central Statistical Office of Poland (GUS), inflation in September suddenly dropped to a single-digit level, falling to 8.2 percent year-on-year. A double-digit inflation rate had been plaguing us for 18 consecutive months, since March 2022. The drastic drop in inflation can be attributed to low gasoline prices in Poland, which are inconsistent with the global rise in crude oil prices.
The preliminary figures from GUS show that this marked inflation decrease brought the rate down to a single-digit level in September. This sharp fall took the rate down from 10.1 percent year-on-year in August to 8.2 percent as of today. On a month-to-month basis, prices fell by 0.4 percent.
Thus, the inflation rate has been declining for seven straight months, from a peak of 18.4 percent in February this year. The last time we saw single-digit inflation in Poland was 19 months ago, in February 2022, when it stood at 8.5 percent. The significant decrease in inflation has been largely due to low gasoline and diesel prices, maintained by Orlen despite Brent Crude (quoted in dollars) rising by over 11 percent in global markets. According to GUS figures, prices in Poland in September fell by 3.1 percent.
The steep decrease in inflation in September may give Monetary Policy Council (RPP) grounds for a further cut in interest rates, planned for next week’s meeting (October 3-4). It is hoped, however, that after the recent substantial depreciation of the Polish zloty, and a much larger than expected cut in interest rates in September, the Council will exercise more caution in its decisions.
Also, Poles are becoming less fearful of inflation. According to the latest eToro Individual Investor Pulse Survey, over the next three months, the state of the Polish economy will be the biggest concern for 32 percent of individual Polish investors, placing this factor at the top of potential external risks. The next biggest concerns are the level of interest rates (15 percent of respondents) and inflation (seen as the biggest threat by 11 percent of investors).
Inflation has been falling significantly not only in Poland. In Germany, it fell below 5 percent in September, reaching 4.3 percent year on-year. Prior to this, from June to August, it had been around 6 percent year-on-year.
Author: Paweł Majtkowski, eToro analyst in Poland.
