HICP inflation quickens 0.2pp to 2.5% y/y in Poland

Polish HICP inflation accelerated to 2.5% y/y in July from 2.3% in June, hitting the highest level since way back in November 2012, according to data released by Eurostat. Despite the rise, the HICP print was still below the 2.9% y/y to which CPI inflation jumped in July. As for CPI inflation, faster food price inflation did the most to push up the HICP print. The main reason CPI inflation is above HICP is that CPI weights food and non-alcoholic drink prices at 24.9% but HICP weights the component at 18.1%. As an example, food prices rose 7.5% y/y, with bread up 9.6%, pork up 12.5%, vegetables up 32.8%, and sugar up 28.3%.

In broad terms, HICP goods price growth rose to 2.1% y/y in July from 1.9% y/y in June, but services price growth jumped to 3.7% y/y from 3.5% the month before. The services price growth pace is the highest since July 2012. The overall index excluding energy and seasonal food prices rose to 2.6% y/y in July from 2.4% the month before in the highest since October 2012 and placing it at a level above the NBP’s 2.5% inflation target.

In terms of Maastricht compliance, Poland’s 12-month average HICP inflation rate again met the criterion. The Maastricht benchmark was 2.3%, according to our calculations. Poland saw 12-month average inflation rise to 1.6% y/y in July from 1.5% after the previous month.

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