MNI NBP WATCH: Rates Held As Energy, Wages Push Up Prices

MNI (LONDON) - The National Bank of Poland held key interest rates on Wednesday, as energy carrier price rises and strong wage growth pushed annual inflation up 0.6 percentage point in September, following increases in July and August. (See MNI NBP WATCH: Policy Hold As Data Shows Inflation Persisting)

The Bank kept its reference rate unchanged at 5.75% after CPI inflation came in at 4.9% last month, compared with 4.3% in August, with increases in annual growth in the prices of food and non-alcoholic beverages also contributing to inflationary pressures over recent months, it said in a statement.

"Considering the preliminary Statistics Poland data, it can be estimated that inflation net of food and energy prices also rose, but remained lower than CPI inflation," the statement added. "In August 2024, the annual fall in producer prices remained significant."

Demand and cost pressures remain "relatively low" despite the Polish economy's continued, if gradual, recovery. Lower inflation pressures abroad and the appreciation of the zloty exchange rate have further curbed the pace of price growth.

However, "marked wage growth" stemming from public sector hikes coupled with increased administered prices will continue to affect the annual inflation rate over the coming quarters, the NBP said.

"When the effects of the energy price increase fade – amid the current NBP interest rates level – inflation should return to the medium-term NBP target, although the impact of higher energy prices on inflation expectations is an uncertainty factor," it said. "The inflation developments over the medium term will be also affected by the further fiscal and regulatory policy measures, the pace of economic recovery in Poland and the labour market conditions."