Poland's producer price index (PPI) eased growth to 6.8% year on year in April (chart) following a revised expansion of 10.3% y/y the preceding month, the country’s statistics office GUS said on May 22.

The PPI has been on a declining trend since September as inflationary pressures are easing in Poland in the wake of the economic slowdown. Other data – especially industrial production, also published on May 22, pointed to a sustained slowdown in economic activity in early 2023 and full-year GDP growth of no more than 1%.

Unlike in their analyses of March PPI data, analysts now appear to have adopted an outlook of the sharp decrease in the PPI growth rate translating into a similarly-paced easing of headline inflation. 

Poland's April CPI growth came in at 14.7% y/y after an increase of 16.1% y/y the preceding month. CPI is expected to descend to below 10% y/y later in 2023 – but likely before the very end of the year.

But even at below 10% – which is clearly above the central bank’s target of 1.5%-3.5% – CPI growth will be fast enough in 2023 to leave very little room for interest rate cuts despite the already weak demand in the domestic economy. The central bank’s reference interest rate has remained at 6.75% since September.

Prices in the most weighted manufacturing segment grew 1.7% y/y in April, after expanding a revised 4.7% y/y the preceding month, the breakdown of the data showed.

Mining and quarrying prices eased growth to 17.5% y/y in April after a revised gain of 21.8% y/y in March.

Electricity, gas and utility prices jumped 42.7% on the year in April – still easing versus a revised expansion of 51% y/y the preceding month.

The water supply segment saw prices expand 3.2% y/y in the third month, slowing down versus a revised increase of 4.4% y/y in March.

In monthly terms, the PPI dropped 0.7% in April after a revised fall of 0.6% month on month in March, GUS data also showed.

The index added 0.3% m/m in mining and quarrying while falling 0.5% m/m in manufacturing. In the utility segment, prices declined 2.1% m/m while dropping 0.1% m/m in water supply.