Local Analysts Take Note Of CPI Miss, Warn Weightings Adjustment Might Bring Upside Revisions

Poland's headline CPI inflation for January surprised to the downside, printing at +17.2% Y/Y versus +17.6% expected, supporting expectations of continuity in the NBP's monetary policy course.

• The research desk of mBank pointed out that the latest CPI reading bucks the regional trend and contrasts with upside surprises in Czechia and Hungary. They see the data as supportive of continued bets on interest-rate cuts. They note that the smaller-than-expected acceleration was due to the impact of aid measures on energy prices, adding that the inflation peak has "notably flattened," even as the preliminary readings might be revised higher.
• According to Pekao, the acceleration of price growth was driven by the removal of most elements of the government's Anti-Inflation Shield. At the same time, they point to the impact of freezing energy tariffs for households and the ongoing "coal deflation" (which is running its course). They see only a mild increase in core inflation for January, likely to +11.7-11.8% Y/Y. They expect headline inflation to peak in February at +18.5%-19.0% Y/Y and suggest that it may fall below +8% Y/Y at the year-end, albeit this may be hindered by sticky core inflation.
  
• ING analysts estimate that the reinstatement of standard VAT rates boosted energy prices by "just" 10.4% M/M. They expect that inflation will peak in February, which will be followed by disinflation coupled with elevated core CPI inflation.
  
• The Polish Economic Institute notes that inflation quickened mainly due to the reinstatement of normal VAT rates on electricity, gas and heating, as well as seasonal price revisions by many enterprises at the start to the new year. They expect inflation to average at +13.0% Y/Y this year, as a slower decline in core CPI will eventually counter a slower increase in headline prices observed now.
• Several local sell-side desks have flagged that the figures published today are preliminary and based on outdated weightings, which will be revised in mid-March, resulting in updates to January and February CPI readings. Most expect the revisions to result in higher CPI prints.