Polish core inflation index — measuring price growth without food and energy — grew 0.3pp to 4.3% y/y in September, the National Bank of Poland (NBP) said on October 16.
“The strong rise of Polish core inflation in September reflects some regulated price effects but also the impact of strong fiscal stimulus on consumption,” ING said in a comment.
Meanwhile, the headline indicator CPI also accelerated growth, adding 0.3pp to 3.2% y/y in the ninth month.
Analysts expect that the CPI and core inflation should begin sliding later this year and in early 2021, moving closer to the central bank’s target of 2.5%.
Expecting a steep fall in the CPI because of the economic crisis induced by the coronavirus (COVID-19) pandemic, Poland’s Monetary Policy Council (MPC) pre-emptively cut interest rates by 140 bps three times in March-September to just 0.1%.
Poland’s GDP is currently expected to contract around 3%-4% in 2020 because of the pandemic, according to most forecasts. Analysts also expect a V-shaped recovery with the economy growing 4%-5% in 2021. The ongoing surge in new infections could bring about revision of these forecasts, however.