Preliminary May CPI Figures Confirmed, Local Desks React To Data

Poland's final May CPI readings were kept unchanged from preliminary figures, confirming that consumer prices rose by 13.0% Y/Y and were unchanged on a monthly basis. The following lists the reactions of several local desks:

• mBank revise their estimate of core CPI a tad lower to +11.5% Y/Y (vs. +11.5%-11.6% based on the flash reading). They note that the stronger-than-expected decline in core inflation is linked to more benign outturns for selected categories amid quickly cooling producer prices, but emphasise that we are still in an "inflationary regime." According to mBank, the movement in headline inflation towards +10%-11% Y/Y this summer is "almost certain," but troubles may emerge later in the year. They reaffirm their call for unchanged NBP rates this year.
• Pekao see core inflation slowing to +11.5% Y/Y in May. They say that it comes on the back of lower price pressures in a range of categories (in contrast with colleagues from mBank they see it as a sign of broadening decline in price pressures rather than an array of individual one-off surprises), which bodes well for future disinflation. They point to a notable cooling of inflation in the services sector.
  
• PKO write that inflation is easing across both goods (to a larger extent) and services (to a lesser extent). Core inflation fell in May, as did its momentum, which would have eased in April already if not for volatile prices of transport.
  
• ING economists point to positive near-term prospects of disinflation, but say that they still see a risk of the decline in inflation slowing in the medium term, which could lead to price growth staying above the NBP target for a long time. Among key pro-inflationary risks they list the expected recovery in consumption, looser fiscal policy, as well as the coming minimum wage hikes and sustained two-digit wage growth.
  
• The Polish Economic Institute suggest that core inflation may have eased to +11.3%-11.4% Y/Y in May. They highlight declines in fuel and food prices.
  
• As a reminder, the NBP will release official core CPI data tomorrow at 13:00BST/14:00CEST.