Is inflation slowing down? Prices in May were the same as in April
Inflation in May was zero on a month-on-month basis, which means that prices did not increase on average. Food prices increased by 0,6 percent. while fuel for cars fell 4,8 percent. Annual inflation fell to 13 percent. and may fall below 10% by the end of the year.
As expected by analysts
Inflation in May fell to 13 percent. y/y, a month earlier it was 14,7 percent - the data was in line with analysts' forecasts. Inflation month-on-month did not increase and amounted to zero. This means that prices in April were the same as in May. The last time that inflation did not increase was in February 2022, and earlier in April 2020.
For the first time in a very long time, prices have not increased, but this does not mean that prices have fallen. With the current level of inflation, prices will rather continue to rise, although at a slower rate than they would fall in real terms. This is clearly visible in food prices, which rose by 0,6% in May. And the annual increase in food prices amounted to 18,9 percent.
On the other hand, energy prices fell in May by 0,5 percent. and fuel prices for cars by as much as 4,8 percent. This shows that the reasons for the decline in inflation remain external rather than internal. And inflation remains firmly entrenched in the economy.
All the more so that an additional inflationary impulse will come from the fulfillment of election promises. Increasing the benefit from 500 plus to 800 plus will generate an effect similar to a single interest rate increase of 0,25 pp. It seems that at the end of the year inflation may fall below 10%, but further reduction of inflation and reaching the inflation target may be much more difficult.
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.