Poland: CPI Nears 14% Rate Hikes Far From Over| MENAFN.COM

Monday, 05 December 2022 01:23 GMT

Poland: CPI Nears 14% Rate Hikes Far From Over


Unfortunately, the data shows the fifth consecutive month of core inflation rising above 1% MoM (this time 1.2-1.3%). In annual terms, the core rate is already at 8.6%. This is a very worrying signal; external inflation may soon fade but the more dangerous internal inflation remains strong and is accelerating.

Wholesale markets suggest that food dynamics may slow in June, and the pressure of higher energy prices should fade after the heating season, but the main point of concern is core inflation. It shows that price pressures are quickly spilling over into other components. And second-round effects are getting stronger.

Policymakers in many countries are trying to prevent second-round effects by raising rates and tightening fiscal policy, even at the expense of an economic slowdown. In Poland, central bank tightening comes with fiscal easing (we estimate fiscal expansion at about 3% of GDP in 2022), which makes the policy mix only marginally restrictive. This will sustain strong consumption growth, making the inflation situation even worse. Such a rapid rise in core inflation supports our National Bank of Poland rate forecast of 8.5% and expectations that peak inflation will reach 15-20% YoY.


*Content Disclaimer:
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more here: https://think.ing.com/about/disclaimer/

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.