Polish CPI inflation slowed to 3.8 percent year-on-year in August from 4 percent y/y a month earlier, Central Statistical Office data shows. The result was in line with expectations.

Economists say decelerating inflation is the result of the economic slowdown taking a firmer grip.

“This development was due to further cuts of food prices (mainly vegetables and fruit) as well as of clothing and footwear prices,” Bank Zachodni WBK wrote in a report.

“In our view this is still not the beginning of a durable downward trend,” Piotr Bujak, chief economist Poland at Nordea Bank, wrote in a report.

“At least until October inflation will remain close to 4%, I.e. clearly above the central bank’s inflation target of 2.5% with allowed fluctuations of +/-1%-point. Thus, we think that the slight inflation drop in August is not enough to convince majority of [Monetary Policy Council] members to trim rates already in October,” he added.

He said, however, that Nordea believes the next data due for release this month (industrial output and retail sales) “will tip the scales in favor of rates-setters calling for a rate cut as soon as possible.”

Poland A.M.