Poland’s domestic price pressures remain subdued as household finances weaken
The Polish economy is exhibiting signs of weakened domestic price pressures predominantly due to declining household finances, as outlined in the recent commentary. Per the full note from ing-think, real disposable income is being adversely affected by slower wage growth of 5.6% YoY in August and increasing fuel prices. This backdrop has led to a moderate slowdown in private consumption, although fixed investment remains robust, driven by activity in the National Recovery Plan. As we assess the market landscape, the desk notes that despite the encouraging investment figures, the looming risks from energy prices could shift inflation dynamics significantly.
What the desk is arguing
The desk argues that Poland's economic conditions suggest a subdued inflation outlook due to weakening household consumption driven by stagnant wage growth and rising living costs. Per the full note from ing-think, the moderation of wage growth coupled with a 0.8% YoY decline in corporate sector employment illustrates a tight squeeze on real disposable income.
Moreover, fixed investment growth has been a bright spot, with construction output surging by 6.7% YoY, aligning with the continued progression of the National Recovery Plan. The dynamics around wage pressures indicate that consumption might continue to slow, putting a cap on inflation expectations.
Where it sits in our coverage
Our most recent consensus target for the EUR/PLN currency pair stands at 1.075, with a range from 1.04 to 1.12. This is supported by firms such as: - jpmorgan: 1.10 by Mar-26 - bofa: 1.04 by Mar-26
This stance aligns with the broader consensus which suggests that while investment remains strong, consumer price support is limited, indicating stable but cautious expectations for the PLN's trajectory.
How other firms see it
Most firms including jpmorgan align on the view that while fixed investment is strong, consumption pressures will limit inflationary pressures. Conversely, bofa expresses concern that rising energy prices could invert this trend, leading to a more aggressive inflation outlook than currently anticipated.
Key indicators to watch include adjustments to the inflation metrics and consumption data, which will likely influence PLN’s performance against pairs like EUR/PLN and USD/PLN as these economic metrics unfold.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Poland's wage growth has moderated to 5.6% YoY, constraining real disposable incomes.
- 02Private consumption is lacking momentum, posing risks to domestic demand-driven inflation.
- 03Fixed investment remains robust, supported by the National Recovery Plan.
- 04Energy prices present the main upside risk to inflation trajectories.
Market implications
Traders should monitor the EUR/PLN around the key levels of 1.075, as consumer sentiment data and inflation reports emerge. Given the stagnant wage growth, inflation volatility could influence market positioning ahead of upcoming economic releases from Poland.
Risks to this view
A significant spike in energy prices could force a reevaluation of inflation forecasts, leading to higher interest rates from the National Bank of Poland. Additionally, a rebound in household consumption, spurred by unexpected fiscal stimuli or wage increases, could inversely affect the PLN's valuation.
Older quick take Quick take Published 11:45 Poland’s domestic price pressures remain subdued as household finances weaken Slower wage growth and higher fuel prices are putting pressure on households’ real disposable income. As a result, private consumption is losing momentum, and domestic price pressures remain subdued. At the same time, robust growth in fixed investment continues to support economic activity Wage growth in Poland moderated in August Wage growth moderated in August Following a surprisingly strong increase in wages in July (6.8% YoY), when earnings were boosted by one-off payments in the energy and forestry sectors, wage growth moderated to 5.6% YoY in August.
This confirms that wage pressure in the economy remains limited. At the same time, employment in the corporate sector declined by 0.8% YoY. Against the backdrop of higher inflation and slower nominal wage growth, real average wages in the enterprise sector increased by just 2.1% YoY.
With the downward trend in wage dynamics continuing and fuel prices pushing inflation higher, households’ real disposable incomes are coming under increasing pressure. Consequently, private consumption growth is slowing, while domestic demand-driven inflation remains benign. The main upside risk to inflation stems from the energy shock and its potential spillover into the prices of other goods and services.
Construction data points to ongoing investment growth While consumption growth is losing momentum, fixed investment continues to expand at a robust pace. In August, construction output increased by 6.7% YoY, with civil engineering activity surging by 29% YoY as projects financed under the National Recovery Plan (NRP) gathered further momentum. Following the agreement on more flexible utilisation of NRP funds between Polish authorities and the European Commission (EC), fixed investment should remain buoyant in the second half of the year despite the August deadline for settling projects under the European Union’s Recovery and Resilience Facility.
Economic outlook remains solid In the second half of 2026, the composition of economic growth is expected to shift more towards fixed investment, with private consumption playing a somewhat smaller role. Nevertheless, we continue to expect solid GDP growth of 3.4% this year and see some upside risks to this forecast. At the same time, we maintain a cautious stance given the uncertainty surrounding developments in the Middle East and the duration and magnitude of the current energy shock.
Investment Inflation rate GDP Consumption 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 Leszek Kasek Senior Economist, Poland Older quick take
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