Poland's producer price index (PPI) declined 10.1% year on year in February (chart), following a revised fall of 10.4% y/y in January, the country’s statistics office GUS said on March 20.

The PPI has been on a declining trend as inflationary pressures are easing in Poland in the wake of the ongoing economic slowdown. 

“[PPI] deflation … is facilitated by falling prices of raw materials on international markets, the strong zloty and the easing of tension in the supply chains,” Millennium Bank said in a comment.

“We expect a gradual pickup in the y/y dynamics of the PPI in the coming months but the ongoing deflation trend is only likely to end towards the end of the year. The index is expected to remain slightly above -10% y/y over the next 2-3 months until the low base effect kicks in, strengthened by the strong zloty and stable oil prices,” Santander Bank Polska said.

Meanwhile, Poland’s February CPI growth came in at just 2.8% y/y, the lowest in three years, GUS reported last week. The CPI’s decline rate is expected to hit bottom around March only to climb back up later on, as measures to rein in the growth of energy and food prices are phased out or otherwise limited in scope.

Prices in the most-weighted manufacturing segment eased their fall to -9.2% y/y in February after falling a revised -10.1% y/y the preceding month, the breakdown of the data showed.

Mining and quarrying prices slid 13.2% y/y in February after a revised fall of 12.2% y/y in January.

Electricity, gas, and utility prices fell 17.5% on the year in February versus a revised fall of 15.5% y/y the preceding month.

The water supply segment saw prices add 1.7% y/y in the twelfth month, following a revised gain of 2.3% y/y in January.

In monthly terms, the PPI inched up 0.1% in February after declining a revised 1.9% m/m in January.

The index fell 0.7 month on month in mining and quarrying while adding 0.8% m/m in manufacturing. In the utility segment, prices declined 1% m/m while growing 0.2% m/m in water supply.