CPI ex-food/fuel/energy, the NBP’s main core inflation indicator, rose to 0.9% y/y in November from 0.8% in October, the NBP said Tues. That is precisely in line with the 0.9% consensus but above our 0.8% forecast. CPI inflation jumped to 2.5% y/y in November from 2.1% the month before. Most of the CPI jump was due to food and fuel prices, so it was not reflected in the main core indicator.
Yet, the NBP’s other three core inflation indicators all accelerated. The second most important indicator tracked by the NBP is the 15% trimmed mean indicator, which rose to 2.0% y/y in November from 1.7% in October. The core inflation indicator stripping out administered prices rose 2.7% y/y, up from 2.2% the month before, and that stripping out the most volatile prices rose 1.8%, up from 1.5%.
Overall, core inflation ticked up in November, but it remains very low. The Monetary Policy Council majority is unlikely to be concerned with spikes in the headline inflation rate to levels near the NBP’s 2.5% target as long as core inflation remains sub-1%. But core inflation is expected by the NBP to be pressured up going forward by faster growth in corporate costs and steadily rising consumer demand. The bank projected in its November Inflation Report that core inflation would rise to 0.7% in 2017 from -0.2% in 2016 and then accelerate to 1.9% in 2018 and 2.7% in 2019.