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Gov Flags Smaller-Than-Exp Impact On Prices From VAT Hike; Warns Of Potential Delayed Effect

NBP

Governor Adam Glapinski begins his press conference describing yesterday's on-hold rate decision as widely expected both at home and abroad, before following on to a discussion of the inflation picture, as part of his summary of the broader economic situation.

  • He reminds that inflation remained consistent with the NBP's target for the third consecutive month in April ("we are perfectly within the NBP's target").
  • The Governor adds that flash data allow to say that core inflation eased again in April - he stresses (again) that core inflation is the main indicator for the MPC now.
  • Glapinski reiterates that the process of disinflation continues, mainly due to the current level of interest rates.
  • The Governor says that the re-introduction of 5% VAT on food was transmitted to consumer prices to the expected extent in April.
  • However, he suggests that part of the impact of the VAT hike may materialise with a delay, hence the risk of a further boost to inflation remains.

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