Poland’s consumer price index (CPI) rose 4.9% year on year in March (chart), maintaining the same pace as in January and February, data published by the national statistics office GUS on April 15 showed.

Although inflation remains above the National Bank of Poland’s (NBP) target range of 1.5%-3.5%, the continued stability in price growth so far in 2025 has shifted the central bank’s monetary policy outlook.

The NBP is widely expected to begin cutting its reference interest rate in May, with analysts anticipating a 50bp reduction to 5.25%. A further 50bp cut is likely to follow in June, according to market forecasts.

“The inflation plateau at the beginning of the year turned out to be lower than the worst-case scenarios, and CPI inflation is unlikely to exceed 5% year-on-year at any point in 2025,” PKO BP said in a comment.

“In our view, inflation will enter a downward trend in April,” PKO BP also said.

Inflation has stabilised overall, as the annual growth in service prices slowed to 6.4% in March – the lowest since August 2024 – from 6.6% in February, according to GUS.

Meanwhile, inflation for goods accelerated to 4.4% year on year in March from 4.3% the previous month, reaching its highest level since early 2024.

The increase was driven mainly by higher prices for food and non-alcoholic beverages, which rose 6.7% year on year in March compared to 6.2% in February.

Alcohol and tobacco prices also rose sharply, influenced by rising excise duties that continued from the previous month. The annual growth rate for this category increased to 5.8% in March from 5.1% in February, GUS data showed.

Core inflation, which excludes food and energy, is estimated to have eased to 3.5% year on year in March, down slightly from 3.6% in February.

“In the coming months, inflation will continue to decline, with the CPI expected to approach the upper bound of the NBP's inflation target this summer,” Bank Millennium said.

“This will be supported by falling fuel prices at petrol stations. A strong złoty will also contribute to disinflation,” Bank Millennium also said.

Elsewhere, a deepening trade conflict between the United States and China could increase the supply of Chinese goods, putting further downward pressure on prices. In addition, developments in the wholesale electricity market suggest that the possible removal of price caps would have only a limited inflationary effect.