Higher fuel costs lift Polish inflation to 4%
Lead — Higher fuel costs have pushed Polish inflation up to 4% year-on-year in September, largely impacting consumer prices amid a notable energy shock. Per the full note , while fuel prices surged due to restored VAT rates and rising global crude prices, core inflation showed slight easing, suggesting limited broader pressure. This could indicate a pronounced yet localized inflationary environment, leading the National Bank of Poland to consider a potential rate hike in the near term. Our analysis highlights that the market may need to brace for a raised outlook on rates should inflation continue to exceed expectations.
What the desk is arguing
The desk sees Poland's inflation rise as a consequence of external shocks, particularly in the energy sector, with fuel prices directly contributing nearly 2 percentage points to total CPI. Per the source, inflation spiked from 3.4% to 4.0% in September, driven primarily by a sharp 9.2% month-over-month increase in fuel costs. This accelerated price increase underscores the vulnerability of the Polish economy to global energy market fluctuations.
Despite the rise in overall inflation, core inflation has ticked down slightly to around 3.0-3.1%, indicating that broader price pressures remain contained for now. This nuanced inflation landscape suggests that while energy prices warrant caution, they have yet to broadly affect the prices of other essential goods and services, allowing the central bank to retain some flexibility.
Where it sits in our coverage
With our consensus target set at 1.075 for the EUR/PLN pair, the expectations are that inflationary pressures could lead to significant shifts in monetary policy. Aligned firms include: - jpmorgan: target 1.10, tenor Mar26 - db: target 1.08, tenor Mar26
The desk's forecast aligns closely with the upper bounds of our coverage spectrum, reflecting a relatively hawkish stance in the context of current rising inflation figures.
How other firms see it
The prevailing view among aligned firms anticipates that inflation data will keep rates in Poland elevated should the energy price trajectory continue. In contrast, firms like bofa express a more cautious outlook, suggesting the potential for stalling growth could temper any aggressive central bank response.
Key related factors to monitor include the EUR/PLN exchange rate, which will likely reflect shifting expectations around monetary policy, and global commodities prices, particularly oil and natural gas, which remain critical drivers in Poland's current inflation dynamics.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Polish inflation rose to 4% in September, primarily driven by higher fuel costs.
- 02Core inflation eased slightly, indicating limited broader price pressures.
- 03The National Bank of Poland may consider a rate hike if inflation remains elevated above 4%.
Market implications
Watch movements in the EUR/PLN currency pair as inflationary pressures could lead to a re-evaluation of interest rates in Poland. A sustained inflation level above 4% may prompt aggressive positioning from market participants as expectations of rate hikes increase.
Risks to this view
If global energy prices stabilize or decline, this could reduce inflationary pressures in Poland, leading to a reassessment of the need for a rate hike. Additionally, weak economic data could prompt the National Bank of Poland to maintain a dovish stance, counteracting current inflation concerns.
Older quick take Quick take Published 10:15 Poland Higher fuel costs lift Polish inflation to 4% Polish inflation accelerated in September, driven mainly by higher fuel prices, which accounted for nearly half of the annual CPI increase. Core inflation eased slightly, suggesting limited broader price pressures. Still, a prolonged energy shock and a worsening inflation outlook could trigger a 50bp rate hike in early 2027 Fuel prices have surged in Poland after the government reinstated the standard 23% VAT rate on fuel at the start of September According to the flash estimate, Poland’s CPI inflation increased to 4.0% YoY in September (ING: 4.2%; consensus: 4.1%) from 3.4% YoY in August.
The rise in inflation was primarily driven by fuel prices, which increased by 9.2% MoM (36.1% YoY), as at the beginning of September, the standard 23% VAT rate on fuel was reinstated after its temporary reduction to 8% in the second half of August, and crude oil prices rose on global markets. As expected, food price trends are beginning to shift. Food prices increased by 0.1% MoM in September following month-on-month declines in the previous four months.
We estimate that core inflation excluding food and energy fell to around 3.0-3.1% YoY in September from 3.3% YoY in August. This suggests that the energy shock has not yet generated broad-based upward pressure on the prices of other goods and services. Poland's inflation is well above target CPI and its sources, %YoY, perc. points.
Source: GUS, ING. "> Source: GUS, ING. The inflation acceleration in the Polish economy is mainly driven by the energy shock. In September, the increase in retail fuel prices contributed nearly 2 percentage points to annual consumer price inflation.
This is the main reason why inflation is now clearly above the upper bound of the permitted fluctuation range around the National Bank of Poland’s (NBP) 2.5% target of +/- 1 percentage point. Inflation is likely to remain above 4% in the coming months. Persistently high energy prices create a risk that cost pressures will spill over more broadly across the economy.
For instance, the beginning of 2027 may bring increases in regulated prices, particularly natural gas tariffs. However, this pass-through should be constrained by demand conditions, slowing wage growth and pressure on real disposable incomes. The inflation outlook has deteriorated since NBP’s July inflation projection.
The November projection, based on a higher starting point and less favourable assumptions for crude oil prices, is likely to show inflation remaining elevated for longer and returning more slowly to the central bank’s target. As a result, the Monetary Policy Council (MPC) may begin discussions on potential monetary policy tightening as early as November. Our current baseline scenario assumes 50bp of rate hikes in early 2027, as a prolonged period of inflation above the upper bound of the NBP’s tolerance band is likely to require some monetary policy tightening to mitigate the risk of broader price pressure.
Other central banks have also adopted a more hawkish stance, either hiking interest rates or signalling further increases, both in major economies – including the Federal Reserve, the European Central Bank and the Bank of Canada – and in the CEE region, notably the Czech National Bank. NBP rates Fuel CPI inflation 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 Rafal Benecki Chief Economist, Poland Older quick take
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