CPI ex-food/fuel/energy, the NBP’s main core inflation indicator, held at 0.8% y/y in July, holding at that level for the third month running, the NBP said Mon. That is in line with the consensus and our forecast. The hold came despite the fact CPI inflation ticked up to 1.7% y/y in July from 1.5% the month before. Most of the CPI acceleration was due to food prices.
The second most important core inflation indicator tracked by the NBP is the 15% trimmed mean indicator, which rose 1.5% y/y, up from 1.3% in June. The core inflation indicator stripping out administered prices rose 1.7% y/y, up from 1.5% the month before, and that stripping out the most volatile prices rose 1.3%, the same as the month before.
Overall, core inflation remains moderate, and that will broadcast a message to the Monetary Policy Council that underlying inflationary pressure is under control. Yet, the MPC continues to be focused first on whether inflation pressures will emanate from the labour market, which has heated up. So far, the MPC majority has not seemed worried about the impact, but some dissent has been created with the current bone of contention being whether the council will have to hike in 2018 or not. That focus does mean there is plenty of time for more data to come in.