Energy dominates Polish CPI, while broader inflation remains contained
The desk observes that Poland's inflationary pressures are predominantly driven by energy costs, with energy prices contributing around 60% of the CPI inflation increase to 4.1% YoY in September. Despite this spike, broader inflation remains contained, indicating the central bank should be cautious in its rate-hiking strategy. Per the full note , core inflation even exhibited a slowdown, with core inflation outside food and energy declining to 3.1% YoY from 3.3% YoY in August. This nuanced inflation landscape suggests a divergence between energy-driven price increases and stabilized core price growth, a dynamic traders need to monitor closely.
What the desk is arguing
The desk believes that Poland's central bank should maintain a steady course on interest rates given the contained nature of broader inflation amidst rising energy costs. According to the latest report, energy and fuel prices surged by 9.2% month-on-month, significantly influencing the overall CPI figure.
Moreover, while goods inflation has accelerated, services inflation has shown signs of moderation, dropping to its lowest level in five months. This is a critical development as it indicates the absence of spillover effects from the energy sector into broader consumer goods and services prices, supporting the desk’s cautious outlook.
Where it sits in our coverage
Our consensus target for the EUR/PLN is 1.075, with a range extending from 1.04 to 1.12. Notably, firms like jpmorgan project levels around 1.10 for March 2026, while bofa takes a more conservative stance with a target of 1.04 for the same tenor.
This desk's perspective appears to align with the average expectations while sitting slightly above the lower end of forecast range. The divergence in targets underscores a market split on how monetary policy may evolve in response to inflation metrics.
How other firms see it
Most firms anticipate that Poland's central bank could remain dovish in light of the contained core inflation yet acknowledge the significant role of energy prices. However, bofa stands in contrast, suggesting that aggressive rate hikes may still be on the table if inflation expectations rise unexpectedly.
Traders should keep an eye on related pairs and indicators such as EUR/PLN and the broader European energy market, as shifts in energy prices may influence broader economic sentiment and monetary policy decisions.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Poland's inflation reached 4.1% YoY in September, driven largely by energy and fuel costs.
- 02Energy prices contributed approximately 60% of inflation, while core inflation has stabilized.
- 03Central bank policy may remain cautious due to the contained nature of broader inflation.
- 04A split in market forecasts reveals differing views on future monetary policy actions.
Market implications
Watch for the EUR/PLN to potentially react to upcoming shifts in energy prices, as this could directly affect inflation expectations and central bank response. A break above resistance at 1.10 may signal renewed hawkish sentiment in the currency markets.
Risks to this view
A significant rise in global energy prices or a pronounced increase in inflation expectations could challenge the current dovish outlook, prompting the central bank to reconsider a more aggressive rate-hiking path, thereby altering market sentiment.
Articles Energy dominates Polish CPI, while broader inflation remains contained Published 10:25 Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Poland’s September inflation was revised up to 4.1% YoY, with energy and fuel prices accounting for roughly 60% of the annual increase. Meanwhile, core inflation even eased, and there is still little evidence that the energy shock is passing through more broadly into other prices. The central bank should not rush to hike interest rates Rafal Benecki and Adam Antoniak A 9.2% monthly jump in fuel prices contributed to higher inflation in September Higher energy prices boosted inflation in September Poland’s StatOffice revised its estimate of September CPI inflation to 4.1% YoY from the 4.0% YoY reported previously.
Goods price inflation accelerated to 3.6% YoY and services prices slowed to 5.3% YoY, compared with 2.5% YoY and 5.6% YoY respectively in August. Services inflation has fallen to its lowest level in five months, with no evidence of second-round effects. Price growth continues to be driven primarily by rising energy costs.
Compared with August, fuel prices increased by 9.2% MoM, while household energy prices rose by 1.0% MoM, mainly due to higher prices for liquid fuels (+14.7% MoM) and solid fuels (+5.5% MoM), including coal (+7.4% MoM). Higher energy prices contributed around 2.5 percentage points, or roughly 60% of September's annual inflation rate. Food prices were broadly unchanged (+0.1% MoM), as were prices in core categories.
We estimate that core inflation excluding food and energy slowed to around 3.1% YoY from 3.3% YoY in August. The deceleration in services inflation suggests that the energy shock is not spreading into other price categories. In September, even categories linked to the AI investment boom were not very buoyant.
Fuels and house energy accounted for 60% of annual CPI in September CPI inflatigon and its sources, %YoY, perc. points. Source: GUS, ING. "> Source: GUS, ING. Inflation likely to remain around 3.5% YoY in the near term In the fourth quarter of 2026, CPI inflation is expected to stabilise near 3.5% year-on-year, the upper end of the National Bank of Poland's (NBP) tolerance band around its inflation target.
The main reason is the reintroduction of government fiscal intervention, which reduces excise duties and VAT rates on fuels during the final three months of this year. In our view, if oil prices remain elevated, the fiscal programme is likely to be extended in the first two months of 2027 despite the challenging fiscal situation. This would help avoid a sharp rise in CPI at the beginning of 2027, when the termination of the programme would otherwise push fuel prices higher.
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