Pro-inflation data on wages

We have published a number of data regarding the Polish economy. Most of them point to the weakening economic situation in Poland, but on the other hand, we still see high data on wages, which may indicate still high inflationary pressure in Poland. The zloty remains strong and we pay only PLN 4 per dollar again.

Inflation pressure

At 10:00 we learned the latest data on wages in Poland. Wages in the enterprise sector increased by 12,8% y/y. This is a lot, considering the inflation level of 3,9% y/y. However, you should remember about higher bonuses paid in January and a higher minimum wage. January usually surprises on the upside in terms of wage data.

The real increase in wages is therefore the highest since 2008! As you can see, on the wage side we may still experience quite significant inflationary pressure, although at the same time we are observing a weakening situation on the labor market. Employment on an annual basis decreased, as expected, by 0,2% y/y. On the other hand, it increased by 0,3% on a monthly basis, although less than the expected 0,4% m/m.

However, this is not the end of negative information regarding economic activity in Poland. Industrial production rebounded in January by 1,6% y/y and 2,3% m/m. However, these values ​​are much lower than expected, as the expected growth was 3,1% y/y and 3,8% m/m, respectively. However, in December we observed negative values ​​in both cases. Continued We are observing stagnation throughout Europe, which is reflected in low PMI index readings.

Not yet

PPI inflation is the lowest in history at -9% y/y with expectations of -8,3% y/y and with the previous level of -6,9% y/y. On a monthly basis, we have a decline of 0,2% m/m, as expected, but from a lower base. The weakness of producer inflation is due to, among others, Polish zloty, which remains quite strong in the last 12 months in relation to the euro or dollar.

Does this data change the perspective on interest rates in Poland? I don't think so. Pro-inflation wage data may, of course, confirm the Monetary Policy Council's belief that interest rates should not be reduced at this time. On the other hand, data on economic activity or employment are not yet weak enough to raise alarm among central bankers.

Today before 11:00 we pay PLN 4,0014 for the dollar, PLN 4,3197 for the euro, PLN 5,0439 for the pound and PLN 5,5389 for the franc.

Source: Michał Stajniak CFA, XTB