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Local Analysts React To Slowdown In Polish CPI Inflation

POLAND
  • mBank writes that "inflation provided a big surprise for the market, but not for us," adding that core CPI inflation has "moved from +11.0% Y/Y to the +11.3-11.4% region." Breaking down the headline reading, mBank flags the prices of energy (+36.8% vs. +41.6% prior) and fuel (+15.5% vs. +19.5% prior) as two notable sources of overall cooling. They note that today's data may mark the end of a sharp decline in Polish government bond yields.
  • Pekao tweets that "NBP interest rates will not rise anymore" following today's CPI readings. Their research desk draws attention to a monthly fall in energy prices (likely driven by coal), while pointing to continued increase in core inflation.
  • PKO analysts note that consumer inflation slowed for the first time since February, owing to a monthly decline in fuel prices, slower annual growth in energy prices and slower monthly growth in the prices of food.
  • ING attributes the below-forecast inflation reading to domestic energy prices (citing large influx of coal to the market), with other components "still high." They note that we should fear persistently high core inflation, like the ECB does.
  • The Polish Economic Institute warns that despite slower price growth in November, inflation is expected to peak in February and may exceed +20.0% Y/Y. The reinstatement of higher VAT on electricity, gas and petrol will slightly lift the inflation path, even as the government will freeze energy tariffs. Headline inflation is expected to begin slowing from March and should still be above +8.0% Y/Y at the end of 2023.

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