In December 2012, Poland’s consumer price index inflation rate rose by 2.4 percent in annual terms and 0.1 percent m/m, the Central Statistical Office announced. Analysts surveyed by PAP had expected the y/y figure to be 2.5 percent. In annual terms, food prices rose by 4.0 percent, while electricity, gas and other fuels rose by 5.1 percent. Meanwhile, transportation prices rose 1.1 percent. The only prices to drop were those of clothing and footwear (-4.7 percent) and products related to health (-0.2 percent). The figure is now below the NBP’s target of 2.5 percent.

Analysts agreed that the data was likely to provide an argument for the Monetary Policy Council to cut interest rates again, for the fourth month in a row, at its February meeting. Poland’s reference interest rate now stands at 4.0 percent.

On Wednesday, the central bank issued its core inflation figures. Excluding food and energy, prices rose by 1.4 percent y/y in December 2012. This was the lowest point since November 2010, the National Bank of Poland reported. The other three core inflation indices declined as well.

Analysts at bank BZ WBK wrote in a statement that “inflationary pressure is no threat for the economy. ... [The] data support our forecast that the Council will make no pause at the upcoming meeting and will cut rates by 25 basis points.”

RG, AK

Poland's CPI of inflation (%), December 2010-December 2012