Jump In Fuel Prices Stabilises Inflation

Preliminary data showed that Poland's headline CPI inflation edged lower to +6.5% Y/Y in November from +6.5% prior, while the sequential reading was +0.7% M/M versus +0.3% prior. The readings were virtually in line with consensus forecasts of +6.6% Y/Y and +0.7% M/M.

• ING believe that inflation is entering a period of stabilisation above the NBP's target, with food, energy and core inflation easing further, offset by a big jump in fuel prices. They point to a significant estimated slowdown in sequential core inflation, to just +0.1% M/M from +0.6% prior. They see CPI in 1Q2024 below +5.0% Y/Y but warn that the return to the target will take much time, as 2H2024 and 2025 may bring higher core and headline inflation. Looking ahead, they think that the main determinants of inflation will be the rising labour costs and a recovery in consumption on the one hand, and external disinflation and a stronger zloty on the other.
• mBank write that the composition of data was different than they expected, especially when it comes to food prices (+0.8% M/M) and fuel prices (+8.8% M/M). They estimate that core inflation fell to +7.3% Y/Y from +8.0%, which would be a positive signal. They assess that the significant drop in core inflation is at odds with the current conditions and might be due to some one-off factor.
• PKO note that a period of quick disinflation has ended, with prices rising by a solid 0.7% M/M, due to seasonal food price hikes (+0.8% M/M) and higher prices at petrol stations (+8.8% M/M) after two months of declines. They expect inflation to remain stable next month and argue that we will need to wait until the beginning of 2024 to see further declines.
• The Polish Economic Institute note that a one-off jump in fuel prices was the main culprit when it comes to the stabilisation of headline inflation. They expect inflation to increase to around +7.0% Y/Y in December due to a temporary increase in energy prices. In their view, inflation will be oscillating around +6.0% Y/Y in 2024, slightly above consensus forecast, depending on administrative decisions.