Poland's inflation is set to peak in Q1 2025, central bank says
WARSAW, July 5 (Reuters) -Inflation in Poland, which slowed in the first half of 2024 back to the central bank's target range, will temporarily rise again and peak in the first quarter of 2025, according to the central bank's inflation report published on Friday.
The central bank now sees the consumer price index (CPI) at 3.7% in 2024, 5.2% in 2025 and 2.7% in 2026. The projections for 2024 and 2025 are higher than in its March report but a touch lower for 2026.
Poland's central bank governor said on Thursday that rates would not be cut before 2026 as inflation was expected to accelerate in the coming months, a day after policymakers kept the cost of credit unchanged.
"The key driver of CPI inflation will be the rise in energy prices associated with the scaling back of the regulation of energy carrier prices previously introduced as part of the government’s anti-inflationary measures," the central bank said.
Another factor driving up inflation will be food prices, pushed up by rising wages and the restoration of the 5% VAT rate on staple foods, it said.
However, after a temporary rise in inflation, further on in the projection horizon disinflation in the Polish economy will continue, the projection shows.
"Apart from the expiry of the factors pushing energy and food price growth up, the process will be supported by a decline in labour costs and easing of demand pressure."
Full report: https://nbp.pl/wp-content/uploads/2024/07/Raport-o-inflacji-lipiec-2024-ANG.pdf
Reporting by Anna Wlodarczak-Semczuk and Pawel Florkiewicz; Editing by Sonali Paul
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