Core Inflation Softens Sharply, While Food Drives Headline Prices

Following that lower-than-expected CPI print, local analysts note that weaker food prices were the key driver, with core estimated at 6.8-6.9% - a notable slowdown from November:

• mBank see core inflation slowing to somewhere around 6.8/6.9%
• Pekao see inflation to be within the NBP target range in Q1'24, however this may be a temporary reprieve, with core at 6.9% Y/Y
• PKO write that the decline in inflation reflected a much smaller increase in food prices, making for the biggest surprise in today's reading. They note a consistent decline in core inflation, estimating the rate at 6.8% in Dec from 7.3% in November
• ING note the increase in food prices was smaller than feared, with 2024 to bring further disinflation. Nonetheless, NBP should be unchanged next week.