Inflation in Poland falls more than expected

December was the second month in a row in which the rate of inflation fell as prices rose less quickly than economists had projected

editor: Grzegorz Adamczyk
author: Maciej Kalwasiński

The rate of inflation has fallen for a second consecutive month in Poland, but despite the good news, double-digit inflation is likely to plague Poland for most of the year. 

The retail price index rose by 16.6 percent in December of last year over December 2021. Forecasters had expected a slowdown in inflation to 17.3 percent, down from 17.5 percent in November and 17.9 percent in October, rates not seen in 25 years. 

The drop in inflation could have been even greater had fuel providers passed on more of the reduction in the price of oil to their customers. However, there was evidence of a slowdown in the rate of increase in food prices, which fell from 22.3 percent in November to 21.5 percent in December.

The monthly rise in prices was also significantly down from 0.7 percent in November to 0.2 percent in December, which was the lowest price increase since June 2020. 

Economists expect the rate of inflation to increase again in the first two months of 2023, with prices starting to fall in March.

The Polish central bank (NBP) estimates that inflation should fall from 20 to 10 percent by the end of the year. This means only that the rise in prices will be slower; it does not imply that prices will fall. The NBP does not expect its inflation target of 2.5 percent to be reached before the end of 2025. 

However, the slower rise in the rate of inflation has helped the majority on the Monetary Policy Council to resist any calls for increasing interest rates, which have held steady at 6.75 percent for the past quarter. 

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