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POLAND: Local Desks Flag Robust Food Prices, Other Factors Behind CPI Surprise

POLAND
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Headline inflation in Poland came in at +5.3% Y/Y in January, beating the consensus call for +5.0% and inspiring a discussion about the sources of this upside surprise:

  • mBank point to relatively robust food price inflation (+1.6% M/M), anticipatory adjustments of alcohol and tobacco prices amid excise tax hikes (+1.5% M/M) and predictable fuel and energy carrier price dynamics. They note that the revision based on updated weighting will likely be to the downside. However, they think that the data do not change the outlook for 2025.
  • ING write that inflation topped expectations just like in Czechia and Hungary. They point to a stronger-than-expected food price growth and no significant improvement in core inflation. They expect a further increase in headline inflation in 1Q25.
  • Pekao note that the beat was driven by above-forecast food price inflation and core inflation (which they estimate at +4.1% Y/Y), while pointing to a larger extent of the annual repricing, mostly in services. They think that the data will support hawkish rhetoric regardless of next month's revisions.
  • In PKO's view, the upside surprise may have been related to alcohol and tobacco prices (+1.5% M/M). They remind that the data may still be revised amid the upcoming re-weighting of the CPI basket and historically these revisions were usually to the downside.
  • The Polish Economic Institute say that higher gas prices and an increase in tobacco and alcohol excise taxes pushed overall CPI higher. In their view, slower services price inflation should result in a gradual decline in headline inflation in 2H2025. They expect Poland to remain among countries with the highest inflation in the EU, although the differentials with Western Europe should remain moderate.
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Headline inflation in Poland came in at +5.3% Y/Y in January, beating the consensus call for +5.0% and inspiring a discussion about the sources of this upside surprise:

  • mBank point to relatively robust food price inflation (+1.6% M/M), anticipatory adjustments of alcohol and tobacco prices amid excise tax hikes (+1.5% M/M) and predictable fuel and energy carrier price dynamics. They note that the revision based on updated weighting will likely be to the downside. However, they think that the data do not change the outlook for 2025.
  • ING write that inflation topped expectations just like in Czechia and Hungary. They point to a stronger-than-expected food price growth and no significant improvement in core inflation. They expect a further increase in headline inflation in 1Q25.
  • Pekao note that the beat was driven by above-forecast food price inflation and core inflation (which they estimate at +4.1% Y/Y), while pointing to a larger extent of the annual repricing, mostly in services. They think that the data will support hawkish rhetoric regardless of next month's revisions.
  • In PKO's view, the upside surprise may have been related to alcohol and tobacco prices (+1.5% M/M). They remind that the data may still be revised amid the upcoming re-weighting of the CPI basket and historically these revisions were usually to the downside.
  • The Polish Economic Institute say that higher gas prices and an increase in tobacco and alcohol excise taxes pushed overall CPI higher. In their view, slower services price inflation should result in a gradual decline in headline inflation in 2H2025. They expect Poland to remain among countries with the highest inflation in the EU, although the differentials with Western Europe should remain moderate.