INFLATION is still not slowing down, and the economy is slowly so – terrible moods in the Polish industry

Inflation at the highest in 25 years, although in line with analysts’ expectations

  • According to the estimates of the Central Statistical Office , the CPI inflation index in June was 15.6% on an annual basis and 1.5% compared to May . 
  • This is the highest inflation reading in an annual perspective since March 1997, but in line with the expectations of most analysts
  • For the third month in a row , the m / m inflation dynamics is declining : in March the monthly price increase amounted to as much as 3.3% , which was the highest monthly inflation reading since the beginning of 1996. In April, the monthly inflation dynamics amounted to 2% , and the May data indicated a decline to 1.7% .
  • The prices of food and non-alcoholic beverages increased in June by 14.1% year on year and by 0.7% compared to the previous month
  • The prices of energy grew by 35.3% annually and by 3.0% compared to April
  • fuel prices for private means of transport increased by 46.7% in the annual perspective and by 9.4% compared to the previous month (above expectations – e.g. in May the increase was 35% y / y and 5% m / m)
  • Estimated core inflation (Core CPI), i.e. excluding food and energy prices, amounted to approx. 9.2% on an annual basis (in May, core inflation amounted to 8.5% y / y)
  • as admitted at the last MPC meeting, NBP president Adam Glapiński: interest rates will rise as long as inflation continues to rise
  • The next meeting of the Monetary Policy Council will be held on Thursday, July 7, and there are many indications that we will face the tenth consecutive interest rate hike, from the current level of 6% of the reference rate
  • this is also shown by FRA contracts : FRA 3×6 (i.e. WIBOR 3M in three months): since the interest rate hike at the beginning of June, they have increased from approx. 7.70% to 8.15%
  • the pressure on the MPC is also growing due to the recent decisions of central banks in the Czech Republic and, above all, in Hungary
  • on the other hand, the potential for further monetary policy tightening will be limited, inter alia, by PMI reading for June

Michael Cooper

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