POLAND: July Inflation Confirmed At +4.2% Y/Y With Energy Prices Allowed To Rise

Statistics Poland confirmed that headline CPI inflation accelerated to +4.2% Y/Y last month from +2.6% in June as the government partially withdrew energy price shields. The NBP will report official core inflation readings on Friday.

• ING estimate that core inflation accelerated to +3.7-3.8% Y/Y from +3.6% prior, while noting that headline was boosted chiefly by energy prices. They expect headline inflation to stay above +4.0% Y/Y this year.
• According to mBank, core inflation may have quickened to +3.8% Y/Y from +3.6% prior. This was partially facilitated by an increase in water prices (+3.1% M/M) but core inflation would have accelerated even without this factor.
• PKO write that 1.4pp out of the total 1.6pp increase in headline Y/Y inflation rate was driven by the partial unfreezing of energy prices, while the remaining 0.2pp was driven by the increase in food and non-alcoholic drinks prices. They expect CPI inflation to remain below +5% Y/Y through the year-end, with a peak seen around +6.0% Y/Y in 1Q2024, should the government continue to gradually unfreeze energy prices.
• The Polish Economic Institute write that electricity and gas prices rose by 10% on average, boosting headline inflation by 1.4pp. Services prices continued to grow at pace (+6.2%). They expect inflation to increase to +5.0-5.5% Y/Y in September and October due to statistical effects before finishing the year below +4.5% Y/Y. They note that current forecasts point to a stabilisation of food and energy commodity prices.