Polish inflation beats expectations driven by fuel prices
At a Glance
Per the full note , Polish CPI inflation jumped to 3.4% y/y in August, well above the market consensus of 3.1%, with fuel costs the primary driver. However, the desk cautions that the statistical office may not have fully captured the temporary VAT cut on fuel, suggesting the actual pace may be overstated. Core inflation is estimated to have ticked up to 3.2–3.3%, while food prices fell deeper into deflation. The National Bank of Poland is likely to hold rates steady, keeping the zloty supported. With no major domestic data on the calendar, the next key test is the central bank's communication in the coming weeks.
Key Takeaways
- 01Polish CPI inflation accelerated to 3.4% y/y in August, above consensus and ING forecasts, driven by fuel prices.
- 02The VAT cut on fuel in the second half of August may not have been fully captured, suggesting the increase is overstated.
- 03Core inflation remains contained at 3.2–3.3% y/y, with food prices in deflation.
- 04The NBP is expected to hold rates steady given the transitory nature of the shock.
Full Analysis
What the desk is arguing
The desk argues that the August CPI print is a temporary fuel-driven spike, not a signal of broad-based reflation. According to the ING economists, the 3.4% y/y reading — up from 3.0% in July and beating both their forecast and the market consensus of 3.1% — was almost entirely due to fuel prices accelerating to 24.2% y/y from 15.8% a month earlier.
The desk posits that the surprise may be overstated, as Statistics Poland likely did not fully capture the impact of the temporary VAT cut on fuel introduced in the second half of August. Core inflation, which excludes food and energy, is estimated to have edged up only slightly to 3.2–3.3% y/y from 3.1%, while food prices fell to -0.9% y/y, reflecting a supermarket price war.
The alternative read — that inflation is re-accelerating — is implicitly rejected. The desk emphasizes the temporary nature of the fuel shock and the persistence of deflationary food trends, which should keep the National Bank of Poland from tightening policy.
Market Implications
Watch EUR/PLN for a muted reaction to the inflation overshoot, as markets focus on the transitory nature of the fuel shock. A decisive break below the 4.26 area would signal renewed zloty strength, but any hawkish surprise from the NBP next month could trigger a pullback.
From the original
Older quick take Quick take Published 10:35 Poland Polish inflation beats expectations driven by fuel prices CPI inflation surprised on the upside in August, accelerating to 3.4% from 3.0% in July, driven by higher fuel prices. However, the increase may be overstated, as Poland's
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