Higher Core Inflation Lifts Poland's CPI In April

(MENAFN- ING) Not only energy-related increases in prices

Statistics Poland (GUS) confirmed the preliminary estimate of April inflation at 3.2% year-on-year. Compared to March, prices rose by 0.6%. Our earlier estimates have been confirmed: the increase in inflation relative to March was driven primarily by core inflation, which according to our latest calculations, reached 3.0% YoY, up from 2.7% YoY in March. May is likely to bring a further increase in this category, particularly given the low base from May 2025.

Detailed April data suggests that some price increases were linked to the Middle East war and the energy shock it triggered. Compared with March, airfares rose sharply, both for domestic flights (over 30%) and international routes (over 60%). The war, affecting trade routes and energy prices in Asia, is also dampening deflationary trends in other categories such as furniture and clothing. That said, price changes in categories such as clothing and footwear remain relatively modest.

Other price increases are unrelated to the war and the energy shock. Charges other than energy related to housing maintenance have risen, including waste collection, water supply and sewerage services. Prices have also increased in the“information and communication” category, including recording media and fees for downloading audiovisual content and streaming, which may be linked to the upcoming reprographic levy added to the prices of audiovisual devices and streaming services.

At the same time, upward pressure remains moderate in categories such as package holidays, which may suggest softer demand and adjustments in consumer behaviour (e.g. a shift towards independently organised domestic trips).

Further inflation increases ahead

Considering the prolonged disruption in the Strait of Hormuz and the lack of progress in negotiations between Washington and Tehran, further increases in inflation appear inevitable. Oil prices remain elevated (above US$100bbl), which has already pushed up fuel prices and directly related services (such as air travel). In the medium term, upside risks to food prices are also increasing. While some market segments currently experience excess supply (including potatoes, dairy and cereals), a dry spring and rising fertiliser prices may lead to faster price growth in the second half of the year and into next year.

Data supports wait-and-see policy stance but markets do their own thing

The latest price data shows that inflation in Poland is rising faster than in the region, affecting not only headline CPI but also core inflation. Some increases are directly or indirectly linked to the energy shock, while others are not. The former include fuels, air fares and diminishing deflationary pressures in household equipment and clothing. The latter are related to non-energy housing maintenance costs and charges for electronic equipment and streaming services. At the same time, the data indicates a slowdown in economic growth – to 3.4% YoY in 1Q26 from 4.1% YoY in 4Q25). For the Monetary Policy Council, this means the wait-and-see approach is justifiable for now.

Investors seem to be concerned that the inflationary outlook might deteriorate further and are betting on three rate hikes this year. While we generally agree on a further increase in inflation and our 3.5% inflation forecast for 2026 is above market consensus, we think the central bank will be cautious given the source of inflationary pressure (supply-side shock). Unsurprisingly, the National Bank of Poland's governor presented a slightly more hawkish tone at the May press conference, but policymakers do not seem to be ready for a decisive monetary policy tightening.

We expect a more lively discussion regarding the potential need for interest rate increases once the Council has reviewed the July macroeconomic projection. Our baseline scenario assumes that interest rates will remain unchanged in 2026. However, if the disruption in Hormuz persists beyond the end of June, the risk of rate hikes would increase (25–50bp). Such a decision would probably require signs of broader inflation spillovers, second-round effects, and rising inflation expectations. For now, this scenario remains a distant prospect, but markets will continue to bet on rate hikes until developments in the Persian Gulf normalise.

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