Economic comment

January’s economic data turned out weaker than our already rather pessimistic assumptions. Downside surprises were seen both in indicators of real activity (industrial and construction output, employment) and in nominal figures (wages, PPI inflation). In our view, the poor January performance largely reflects one-off factors (a smaller number of working days, a holiday calendar conducive to long weekends, a very low average temperature in January of -4.3 ℃ compared with +1.8 ℃ in January 2025, as well as snowfall), which does not undermine the positive medium-term trend. This is evidenced, among other things, by still solid and even improving optimism surveys among consumers and businesses. We therefore expect a rebound in the coming months, although February will still be affected by harsh weather conditions. In our opinion, the data released today increase the likelihood of an interest rate cut at the Monetary Policy Council’s upcoming meeting in March.

CPI inflation stood at 2.2% y/y in January, down from 2.4% y/y in December. The outcome was clearly above expectations: the market consensus was 1.9% y/y, while our forecast stood at 1.7% y/y. Given that January inflation data came in above expectations, we believe the probability of an interest rate cut in March has declined, although it remains our baseline scenario. Moreover, we see a lower probability that the MPC will opt for deeper rate cuts later this year. We maintain our view that the easing cycle will come to a halt in 2Q26, with the NBP reference rate settling at 3.50%.

The winter—atypically frosty and snowy by recent standards—apart from its aesthetic appeal, had an impact on economic performance. We show how it affected various areas of economic activity, including by looking at expenditures captured in data on our bank’s customers card payments. According to our findings, consumer spending growth was still solid in January, while the frosts may have weakened industrial and construction output, reducing their January growth rates by around 2.5pp and nearly 4pp, respectively. In January, the value of card spending was up 6.1% y/y, marking a slowdown from the 8.4% y/y growth recorded in December, but beating November (4.5% y/y). In January we recorded an increase in card spending, among others, on clothing and footwear, sports equipment and heating fuel. It appears that the frosts partly discouraged people from going out to eat or to the cinema, but not from visiting shopping centres. (...)