The final reading of consumer inflation for May confirmed the preliminary estimate. Consumer prices in Poland increased by 3.1% year on year, while compared with April they declined by 0.3%.
The May data came as a positive surprise, especially when set against earlier market expectations, which had pointed to inflation of around 3.7%. This suggests that the impact of rising geopolitical tensions on consumer prices has so far been clearly weaker than some market participants had assumed.
As a result, investors have once again revised their expectations regarding the future path of interest rates. More clarity on the inflation outlook should come with the July projection of the National Bank of Poland.
In annual terms, price declines were recorded in several categories, including clothing and footwear, as well as furnishings, household equipment and routine household maintenance. At the same time, the strongest price increases were seen in alcoholic beverages and tobacco products, as well as in education services.
Recent comments from the President of the National Bank of Poland and members of the Monetary Policy Council, combined with incoming macroeconomic data, currently point to a scenario in which interest rates remain stable over the coming quarters.
According to Jan Karczewski, Director for Strategic Clients at Michael / Ström Brokerage House, the latest inflation data support the view that price pressures are easing more visibly than previously expected. However, the coming months will be important for assessing whether this trend proves durable and whether inflation remains close to levels that would allow the central bank to maintain a more cautious approach to monetary policy.
The final May reading therefore strengthens the argument that inflationary pressure in Poland is moderating. Still, the outlook remains dependent on several factors, including energy prices, wage growth, consumer demand, fiscal policy and external geopolitical risks.
Disclaimer: The information contained in this publication is for informational purposes only. It does not constitute financial advice or any other form of advice. It is general in nature and is not addressed to any specific recipient. Before using this information for any purpose, independent advice should be sought.
Source: based on commentary by Jan Karczewski, Director for Strategic Clients, Michael / Ström Brokerage House.
