Inflation in August, however, double-digit

Inflation in August amounted to 10,1 percent. y/y (against 10,8% in July). Thus, inflation failed to fall to a single-digit level before the end of the summer. This, however, may not be a hindrance RPP in making the first interest rate cut in less than a week.

The market expects a rate cut before the election

Inflation in August amounted to 10,1 percent. y/y Thus, the forecasts of some economists and the expectations of politicians that this month inflation would fall to a single-digit level did not come true. In relation to the month, prices in August did not change (against a drop of 0,2% in July). However, this is only a preliminary price estimate published by the Central Statistical Office. The final reading will be announced on September 15. Usually, the final readings do not differ much from the preliminary ones, but this time, the act being processed by the parliament, reducing electricity prices for individual consumers by 5%, retrospectively (from January 1 this year), may enter into force. The final reading may therefore be based on other data than the initial estimate. However, it may also be that this effect will be included in inflation only in the next month.

The August inflation reading, as well as the next upcoming readings, is watched with particular attention by economists due to its impact on the MPC's decision to cut interest rates. The market expects the Council to make the first interest rate cut before the elections (to be held on October 15), and inflation to drop below 10%. could be an additional argument for this. There is no doubt, however, that from an economic point of view, it is too early to cut rates, especially when inflation is so far from the inflation target of 2,5%. (with a tolerance of 1 pp). However, the market believes that political arguments will prevail and interest rate cuts will take place in September or possibly October. The Council has again postponed its September meeting, which will take place on the originally planned date of 5-6 September. This means that the first rate cut may take place in a week's time.

Recession is scarier than inflation

Poles have recently become more afraid recession than inflation. In the Individual Investor Pulse survey eToro, the percentage of investors who consider inflation to be the biggest external risk fell from 27% to to only 7 percent. At the same time, the number of investors concerned about the condition of the Polish economy increased significantly - from 8% to up to 36 percent This is the result of concerns about the recession and the possible financial impact of the election campaign.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.