Fuel prices push Polish inflation higher as energy outlook deteriorates
The National Bank of Poland's monetary policy is likely to be influenced by the recent uptick in inflation driven primarily by surging fuel prices, confirmed at 3.4% YoY in August. According to the latest report from ING, the escalating geopolitical tensions and rising energy costs diminish the likelihood of rate cuts until the latter half of 2027, making the Polish złoty vulnerable against its peers. A sharp 24.2% YoY increase in fuel prices has been particularly notable, impacting overall inflation and consumer sentiment. The desk frames this as a potential catalyst for PLN weakness in the near term as pressures mount on the central bank’s ability to navigate these inflationary pressures, which could be reflected in currency dynamics ahead of forthcoming key economic reports.
What the desk is arguing
The recent reaffirmation of Poland's August CPI inflation at 3.4% YoY underscores the difficulty facing the National Bank of Poland in maneuvering monetary policy amidst rising fuel prices. Per the full note from ING, fuel prices have surged 24.2% YoY, significantly contributing to inflation, and complicating any potential for rate cuts until 2027.
Rising gasoline and diesel prices were the primary drivers behind this inflation jump, with transport services also reflecting an increase of 10.6% MoM. Despite competitive pressures leading to falling food prices, the overall inflation trajectory remains upward, which could keep the monetary policy stifled in the near term.
Where it sits in our coverage
Our cross-firm consensus for PLN/USD targets is set around 1.075 with a range from 1.04 to 1.12. Specific target insights include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This view aligns moderately with jpmorgan on the higher end, reflecting a cautious but bearish sentiment as inflation concerns weigh on the PLN.
How other firms see it
Several firms such as jpmorgan express alignment with a cautious outlook on the PLN, indicating a potential for weakening against volumetric inflation pressures. Conversely, bofa presents a more drastic and bearish stance on the zloty, suggesting a different economic assessment of the Polish market's resilience to inflationary pressures.
Watch the EUR/PLN trajectory for spillover effects, as the eurozone's broader economic indicators will likely influence the PLN exchange rate amidst ongoing inflation discussions.
What the calendar says
There are no upcoming major economic events on the calendar that will impact Poland's monetary policy or inflation metrics, indicating that the PLN will be guided primarily by external market forces and geopolitical developments in the near term.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Poland's inflation confirmed at 3.4% YoY, primarily due to rising fuel costs.
- 02Fuel prices surged 24.2% YoY, complicating the National Bank of Poland's monetary policy.
- 03Rate cuts from the NBP are unlikely until mid-2027.
- 04The PLN may weaken against peers as inflation remains a significant concern.
Market implications
Focus on the PLN's performance against the backdrop of these inflationary pressures, particularly its movement around levels of 1.075. Traders should consider geopolitical developments which may further influence the currency's valuation as fuel prices remain volatile.
Risks to this view
A significant easing in fuel prices or a substantial decrease in inflation dynamics could prompt a re-evaluation of the current inflation trajectory, potentially leading the NBP to consider earlier rate cuts, which would strengthen the PLN.
Articles Fuel prices push Polish inflation higher as energy outlook deteriorates Published 11:14 Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Poland’s August CPI inflation was confirmed at 3.4% YoY, with rising gasoline and diesel prices accounting for most of the increase. Escalating geopolitical tensions and higher oil and gas prices have worsened the near-term inflation outlook, making any rate cuts from the National Bank of Poland unlikely before the second half of 2027 Adam Antoniak , Rafal Benecki and Leszek Kasek Poland's inflation outlook is deteriorating as the energy crisis intensifies August inflation confirmed at 3.4% Poland’s StatOffice confirmed its preliminary estimate of August consumer price inflation at 3.4% year-on-year. Goods prices increased by 2.5% YoY, compared with 2.0% in July, while services inflation edged up to 5.6% YoY from 5.5%.
Within the goods category, fuel prices rose particularly sharply (up by 5.2% month-on-month). Among services, transport prices increased by 10.6% MoM, driven partly by international airfares. Package holiday prices also rose significantly (3.8% MoM).
More expensive fuel was the main source of inflation The rise in fuel prices was the main driver of the increase in inflation in August. We estimate that it added around 0.5 percentage points to the annual inflation rate compared with July. Fuel price inflation accelerated to 24.2% YoY from 15.8% a month earlier.
Food and non-alcoholic beverage prices moved in the opposite direction. Their annual decline deepened to 0.9% in August from 0.4% in July. From the inflation perspective, conditions in the meat, livestock and dairy markets remain favourable.
Meat prices fell by 0.4% MoM, while dairy prices also declined by 0.4% vs the previous month. Fruit and vegetable prices continued to fall sharply, dropping by 2.7% MoM and 3.8% MoM, respectively. Competition between the largest retail chains remains intense, with retailers continuing to offer substantial discounts and promotions.
We estimate that core inflation (CPI excluding food and energy prices) increased marginally to 3.2% YoY in August, from 3.1% in July. Energy accounted for more than half of the annual increase in consumer prices in August. Outside the energy component, however, broader price pressures remain limited by weakening demand.
Slowing wage growth and higher fuel prices are constraining household spending. Private consumption growth eased to 2.8% YoY in 2Q26, from 3.3% YoY in the first quarter of the year. Inflation growth driven by fuels CPI, %YoY, percentage points Source: GUS, ING. "> Source: GUS, ING.
Prolonged Middle East tensions worsen the energy outlook Escalating tensions in the Middle East, the lack of an agreement concerning the Strait of Hormuz, the threat posed by Houthi rebels to shipping in the Red Sea and the Bab al-Mandab Strait, along with the damage to Saudi Arabia’s East-West oil pipeline have pushed crude oil prices back above US$100 per barrel. As a result, the near-term inflation outlook has deteriorated, mainly because of the risk that fuel prices will remain elevated for longer. Alongside high oil prices, recent weeks have also brought a renewed increase in European natural gas prices.
The one-month TTF contract is currently trading at around €83/MWh, up from around €30 in late February and around €50 in mid-July. What is more, wholesale electricity prices went up significantly (2027 base forward to PLN590 per MWh in mid-September from around PLN500 in late August). This could result in a significant increase in regulated household electricity and natural gas prices under tariffs approved by Poland’s Energy Regulatory Office (URE), which are due to come into effect at the beginning of 2027.
NBP rate cuts unlikely before the second half of 2027 Each additional month of elevated fuel prices increases the risk of second-round inflation effects. Nevertheless, the current environment remains significantly less inflationary than during the Covid-19 pandemic and following Russia’s invasion of Ukraine. Both in Poland and abroad, household income constraints are limiting companies’ ability to raise prices.
In our view, the likelihood of interest rate increases on the scale currently priced in by the market remains low. Should geopolitical tensions persist over the coming months, Poland’s CPI inflation could rise towards 4% YoY in the near term. A more pronounced decline in inflation is unlikely before the second half of 2027.
We expect the Monetary Policy Council (MPC) to keep interest rates unchanged at least until the end of 2026 while monitoring risks related to developments in the energy market. In our view, any easing of monetary policy is unlikely before the second half of 2027. NBP rates CPI Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.
The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Adam Antoniak Senior Economist, Poland Adam has about 20 years of experience in macroeconomic research. He has worked for leading financial institutions in Poland (Bank Pekao, Bank BPH), and members of international financial groups… Rafal Benecki Chief Economist, Poland Rafal Benecki is a Chief Economist at ING in Poland, joining in 2005.
Prior to this, he was the head of the Economic Analysis Bureau at Millennium Bank in Warsaw. He has an MSc in Financial… Leszek Kasek Senior Economist, Poland Leszek Kąsek is a Senior Economist in the economic research team at ING Bank Śląski in Warsaw, responsible for sustainability, energy transition, and green finance in Poland. He… In this article August inflation confirmed at 3.4% More expensive fuel was the main source of inflation Prolonged Middle East tensions worsen the energy outlook NBP rate cuts unlikely before the second half of 2027
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