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Economic comment


Inflation gradually up

Economic Analysis | Economic comment

Statistical office confirmed that CPI inflation increased in May to 2.5% y/y from 2.4% in April. This comprised marginal increase in goods inflation to 1.2% y/y from 1.1% and stabilization of services inflation at 6.2% y/y. Food inflation decreased to 1.6% from 1.9% amid relatively low 0.3% m/m print. We estimate the core inflation for May at 3.8% with 0.1% monthly price growth.  Our forecasts assumes increase in headline inflation to ca. 3.9% in July, 5.3% at year-end and near 4% at the end of 2025. We expect average core inflation at 0.3% m/m and 4% y/y till the end of next year. Although CPI data tended to surprise to the downside over the last several months inflation remains elevated, which in our view amid recovering consumer demand will keep the MPC away from cutting rates at least till mid-25.


Zero probability of rate cuts this year

Economic Analysis | Economic comment

At today's conference, NBP President Adam Glapinski reinforced his hawkish message from May - he openly announced that his message is hawkish and, under the scenario assumed by the NBP, the probability of rate cuts this year is zero. (...) Moreover, the NBP governor has not ruled out a rate hike if inflation does not ease next year or continues to rise. In contrast to previous conference the NBP Governor clearly mentioned a possibility of a rate hike. (...) Adam Glapinski said he hoped that space for rate cuts would emerge in the middle of next year (unlike a month ago, when he pointed to 1Q 2025), which would be in line with our baseline scenario.


1Q GDP: consumption hidden in services

Economic Analysis | Economic comment

GDP growth in 1Q24 was 2.0% y/y and 0.5% q/q on a seasonally adjusted basis. Its main driver was private consumption, which grew by 4.6% y/y (2.1% q/q s.a.), significantly stronger than expectations. It appears that household spending on services (not visible in the retail sales data) played a significant role in the acceleration of consumption growth early in the year. This supports our long-held view that 2024 will be a year of economic acceleration based mainly on the resurgence of private consumption. We expect the GDP growth to improve to c.3% y/y in the coming quarters. The structure of GDP growth is not particularly favourable for disinflation prospects. The data will probably join the set of arguments used by the MPC to justify keeping interest rates “higher for longer”. In May, the Polish manufacturing PMI again surprised with a significant decline, but - due to the good performance of alternative indicators - we do not assume that this points to an imminent slump in industry.