Citi Handlowy Expect January CPI Print To Be Revised Lower

Citi Handlowy write that the annual revision to the composition and weightings of the CPI basket should result in a lower print for January. The flash reading was +3.9% Y/Y but the local statistics office typically revises the January reading alongside the release of February data and the implementation of revisions to the CPI basket in March.

• Citi point to the already released tweaks to the HICP basket, which involved a reduction of the weighs carried by food and non-alcoholic drinks as well as transport, while the weight of rents and alcoholic drinks and tobacco rose. They expect similar revisions to the Polish CPI basket as real income growth allows consumers to increase consumption, with staple items (such as food) playing a smaller role.
• They also point to a historical pattern, with January CPI readings revised higher only in two out of the last 24 years. They note that a degree of uncertainty is associated with the scale rather than the direction of this effect.
• Citi expect January CPI to be revised 0.2pp lower to +3.7% Y/Y but the risks to this forecast are skewed to the downside. They note that if historical correlations hold this year, then the January reading could be revised up to 0.4pp lower.
• Poland's February CPI data will cross the wires on March 15 alongside the updated January reading and the details of the annual CPI basket revision.