Core inflation in Poland falls to 3% for first time since 2019

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Notes from Poland is run by a small editorial team and is published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Poland’s core inflation – a measure that excludes the most volatile categories, such as food and fuel – slowed to 3% year-on-year in October, its lowest level since 2019, according to new data from the National Bank of Poland (NBP).

The rate was down from 3.2% in September and 4.1% a year earlier, strengthening expectations that the central bank may continue cutting interest rates. Core inflation previously peaked at over 12% in 2023, amid the fallout from the pandemic and Russia’s full-scale invasion of Ukraine.

Analysts focus closely on core inflation because it provides a clearer picture of how well the central bank’s monetary policy is working than the broader headline interest rate, known as the consumer price index (CPI).

As the National Bank of Poland (NBP) explains, energy and fuel prices “are determined not on the domestic market but on global markets, sometimes also influenced by speculation”, while “food prices are largely dependent on factors such as weather and the current situation on the domestic and global agricultural markets”.

Core inflation, by excluding such items, “shows price trends for goods and services that are relatively heavily influenced by the central bank’s monetary policy”, notes the central bank.

The drop in the core inflation has been broadly tracking the fall in the headline inflation CPI rate, which stood at 2.8% in October.

Both indicators began accelerating in 2021, driven by supply-chain disruptions and a surge in post-lockdown demand. Inflation climbed further in 2022 after Russia’s full-scale invasion of Ukraine sent global energy prices higher.

CPI inflation peaked at 18.4% in February 2023, while core inflation reached a high of 12.3% the following month. Both have been easing steadily since then. As inflation receded, the central bank cut interest rates from a two-decade high of 6.75% in 2022–2023 to 4.25% this month.

Although analysts are divided on the timing of the next rate cut, ING Bank Śląski economists believe that the slowdown in inflation “could translate into another 25-basis point interest rate cut in December”.

“The decline in core inflation and the slowdown in services inflation in October confirm the continued disinflationary trends in the Polish economy,” they wrote, commenting on the data.

Notes from Poland is run by a small editorial team and published by an independent, non-profit foundation that is funded through donations from our readers. We cannot do what we do without your support.

Main image credit: Erik Mclean/Unsplash

Alicja Ptak

Alicja Ptak is senior editor at Notes from Poland and a multimedia journalist. She previously worked for Reuters.