Poland's core inflation likely to fall in H2, says central bank governor

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Poland's core inflation likely to fall in H2, says central bank governor

Poland's core inflation will probably decline in the next few months and quarters and will certainly start decreasing in H 2, the governor of the National Bank of Poland (NBP) has said.

On Thursday, Glapinski held a press conference following the decision by the Monetary Policy Council to keep all interest rates steady for the eight-month period, with the reference interest rate remaining at 6.75 percent.

NBP said Poland's core inflation, which excludes food and energy prices, measured 12 percent year-on-year in March 2023, up from 12 percent in February.

CPI rose 14.7 percent year-on-year and 0.7 percent month-on-month in April 2023, according to the Central Statistical Office GUS prices of consumer goods and services Consumer Price Index.

Core inflation that has received more attention recently. Many countries still have high levels of unemployment. This applies to the eurozone countries, the USA and especially to the countries of our region. It's nothing unusual about our core inflation, Glapinski said.

Core inflation is expected to drop in the next few months and quarters. It should be decreasing already in H2 to reach a single-digit level by the end of the year, Glapinski said.

The economic downturn was attributed to the severe shocks that were causing high inflation, he said. Entrepreneurs included the increasing costs of raw materials and energy in the prices of their products, which spread further. Glapinski says the increase in price is facilitated by the good job situation on the labour market.

Polish demand gap has likely closed and buyers can no longer propose arbitrary prices, he said, but added, Poland's demand gap has likely closed. With maintained economic growth and positive real wage growth, he said, prospects for the Polish economy for H 2 and 2024 are good.