Poland's producer price index (PPI) grew 5.3% y/y in April after expanding 3.9% y/y in March, the country’s statistics office GUS said on May 21.

The April reading marks the fourth consecutive expansion of the index after a 10-month streak of falls or zero growth in factory gate prices, an effect of the overall slowdown in economic activity during the coronavirus (COVID-19) pandemic.

As the economy is picking up now, the accelerating growth of the PPI in April largely owes to skyrocketing prices of commodities, oil refinery products and coking coal, in particular, Poland’s state-run bank PKO BP notes. 

“We expect PPI inflation to increase to 7%-8% y/y this year and its base components will play a large part in this,” PKO BP said.

“For the first time in years, prices of industrial goods, except oil, will have a significant impact on pro-inflationary trends in the economy – that is the effect of bottlenecks and problems with the supply of raw materials and of semi-finished products,” PKO BP added.

That will have an impact on headline inflation, ING says, as producers will be gradually passing on cost increases to consumers. 

“The progress in vaccination and gradual reopening of the economy will soon be complemented by pent-up consumer demand. We should also see further stimulus from the EU Recovery Fund and the Polish Deal," ING wrote.

The PPI data breakdown shows that prices in the most-weighted manufacturing segment grew 5% y/y in April after adding a revised 3.6% y/y in the third month. 

Mining and quarrying prices grew 22.1% y/y (March: +23.3% y/y) in April. 

Electricity, gas, and utility prices expanded 2.5% on the year in the fourt month, the same y/y growth rate as in the preceding month. The water supply segment saw prices ease 0.2pp to 3.3% y/y. 

In monthly terms, the PPI grew 0.5% after adding a revised 1.6% in March, data also show.

The PPI gained 0.2% m/m in mining and quarrying while growing 0.6% m/m in manufacturing. The index expanded 0.1% m/m in the utility segment and in water supply alike.