According to the final data recently released by Statistics Poland (GUS), consumer inflation in March fell to 2 percent year-over-year, which is slightly higher than the preliminary estimate. On a month-to-month basis, comparing March to February, prices increased by 0.2 percent.
Previously, a flash estimate had suggested that inflation in Poland dropped to 1.9 percent year-over-year in March from 2.8 percent in February, a reading lower than market expectations. The month-to-month flash estimate was confirmed. In a year-over-year comparison, prices for goods increased by 0.4 percent, while service prices rose by 6.6 percent, according to GUS.
Service inflation remains elevated, significantly impacting the core inflation rate.
Year-over-year, higher prices in restaurants and hotels (up 8.6 percent), housing (up 1.5 percent), and alcoholic beverages and tobacco (up 5.2 percent), increased the annual inflation rate by 0.47 percentage points, 0.38 percentage points, and 0.29 percentage points. Lower prices in transport (down 2.9 percent) and food (down 0.3 percent) reduced the rate by 0.27 percentage points and 0.07 percentage points.
Economists at Bank Millennium note that although the overall CPI index remains within the permissible deviations from the inflation target of the National Bank of Poland (a target of 2.5 percent year-over-year with a permissible range of fluctuations of 1 percentage point), the Monetary Policy Council is rightly stabilizing the NBP’s interest rates.
Core inflation, measured without food and energy prices, is converging to the NBP’s target slower than the general consumer price index, due in part to the high dynamics of service price increases.
It is important to note that price increases may accelerate again in April. As of April 1, the VAT on basic food products has returned to a 5 percent rate.
