Local Sell-Side Desks React to Below-Forecast CPI Data

Local analysts note that the larger than expected slowdown in Poland's headline CPI was mostly due to a weaker increase in food prices, while core prices are still running hot. Flash data for April released today showed that headline inflation fell to +14.7% Y/Y from +16.1% in March versus the +15.0% median estimate in a Bloomberg poll.

• The research desk of mBank tweet that there were no surprises when it comes to fuel and energy prices, but they find a deceleration in food price inflation to "almost normal" levels curious. They add that their interpretation of this will depend on the composition of price dynamics across different categories of food. They estimate that core inflation may have been +12.2% Y/Y this month.
• Pekao say that core inflation is likely in the +12.3-12.4% Y/Y range and they don't see disinflation on that front. Headline inflation slowed more than forecast mostly due to a smaller than expected food price growth.
  
• According to PKO, the deceleration of headline CPI inflation was facilitated by statistical base effects and the normalisation of food and energy prices. They estimate that core inflation cooled to +12.1% Y/Y from +12.3% prior.
• ING are wondering if "disinflation" is a good term to describe what we are observing, if the decline in inflation is mostly driven by easing fuel, energy and food price shocks, while core inflation (which they estimate at +12.2% Y/Y) remains elevated despite a recession in household consumption.
  
• The Polish Economic Institute note that core inflation likely slowed to +12.2% Y/Y from +12.3% in March, while headline inflation was weighed on by a slower food price growth. They estimate that inflation will slow by another 1pp in May, as food prices will rise even slower. They warn that most goods and services in the core CPI basket keep rising and the probability of a quick change in this trend is low, adding that headline CPI may remain near +9% Y/Y towards the year-end.