According to preliminary estimates, inflation in Poland amounted to 17,9%

According to a flash estimate, inflation in Poland in October this year. was 17,9%. This is another record level in this cycle, but the reading is slightly below market expectations of 18,0%.

Inflation in Poland was 17,9%

We owe slightly better inflation than expected to a certain extent to lower increases in energy carriers (+ 2,0% month on month) and fuel prices (+ 4,1% monthly). On the other hand, a lot was added to inflation by the increases in food prices (+ 2,7% month on month). The difference between the NBP reference rate and inflation already amounts to 11,2 percentage points. This means further pressure on further rate hikes by the Monetary Policy Council (the next meeting will be held on Wednesday, November 9). We estimate the core inflation at 11,1% year on year (it is also another “hill” in this cycle).

Annual change in the consumer price index (inflation) and core inflation in Poland. Source: own study, GUS

Month-on-month inflation increased by 1,8% (the strongest since April this year), ie  on a monthly basis, there is no weakening of inflationary pressure yet. And it is in the monthly changes (especially core inflation) that we should see the first signs of inflation slowdown. And that is still ahead of us. The market expected a monthly increase in inflation by 1,7%.

Monthly change in the consumer price index (inflation) and 6-month moving average (monthly change) in Poland. Source: own study, GUS

We estimate the rise in core inflation at around + 1,1% in August this year. (this is the third strongest monthly increase in this cycle, the exact calculations will be published by the NBP in mid-October this year). It can be said that monthly core inflation remains at a high level, unfortunately.

Monthly changes in core inflation (only food and energy prices) and 6-month moving average (monthly changes). Source: own study, NBP.

The prices of "food and non-alcoholic beverages" increased by 2,7% in October this year. - more than the seasonal pattern, following a similar increase in food prices in 2021 (in the previous year, monthly changes in food inflation accelerated at the end of the year). Let us remember that in 2022 there were no drops in food prices during the summer holidays. The long-term average monthly change of this series in October is only + 0,67%.

Monthly change in the series "Food and non-alcoholic beverages" in 2022 against the average path for 2000-2021 (seasonal pattern). Source: own study, GUS

The CSO also quickly estimates changes in the prices of "Energy carriers" and changes in the prices of "Fuels for private means of transport".

"Energy carriers"(I.e. electricity, gas, fuel (coal), thermal energy) increased rapidly in October this year. by 2,0% compared to September this year, and the annual change is as much as 41,7%.

Monthly price change for "Energy carriers", and 6-month moving average (monthly changes). Source: own study, GUS

The annual change in the prices of "Energy carriers" compared to the annual change in the entire basket of inflation. Source: own study, GUS

"Fuels for private means of transport”(Ie mainly diesel oil and gasoline) increased rapidly in October this year. by 4,1% (after three months of decline), and the year-on-year change was 19,5%.

Monthly price change for "Fuels for private means of transport", and 6-month moving average (monthly changes). Source: own study, GUS

Annual change in the prices of "Fuel for private means of transport" against the background of the annual change in the entire basket of inflation. Source: own study, GUS

About the Author

Jaroslaw Jamka - Experienced fund management expert, professionally associated with the capital market for over 25 years. He holds a PhD in economics, a license of an investment advisor and a securities broker. He personally managed equity, bond, mutli-asset and global macro cross-asset funds. For many years, he managed the largest Polish pension fund with assets over PLN 30 billion. As an investment director, he managed the work of many management teams. He gained experience as: Member of the Management Board of ING PTE, Vice-President and President of the Management Board of ING TUnŻ, Vice-President of the Management Board of Money Makers SA, Vice-President of the Management Board of Ipopema TFI, Vice-President of the Management Board of Quercus TFI, Member of the Management Board of Skarbiec TFI, as well as Member of Supervisory Boards of ING PTE and AXA PTE. For 12 years he has specialized in managing global macro cross-asset classes.

Disclaimer

This document is only informative material for use by the recipient. It should not be understood as an advisory material or as a basis for making investment decisions. Nor should it be understood as an investment recommendation. All opinions and forecasts presented in this study are only the expression of the author's opinion on the date of publication and are subject to change without notice. The author is not responsible for any investment decisions made on the basis of this study. Historical investment results do not guarantee that similar results will be achieved in the future.