“The lower price dynamics in the fuel category (-11.4 percent year -on -year in May against -8.3 percent) were affected primarily by the decrease in inflation, which was the effect of the recently recorded reduction of global oil prices expressed in PLN. The total inflation drop was also due to the decrease in the base inflation, which according to our estimates decreased in May to 3.2 % in May 3.4 percent in April, “Credit Agricole Bank Polska said.
As they pointed out, lower base inflation (i.e. without energy, fuel and food prices) resulted primarily from a decrease in price dynamics in terms of health (lower rate of increased prices of auxiliary medical services and unconventional medicine), as well as connectivity (mainly the effect of a decrease in dynamics of internet services) as well as recreation and culture (including a decrease in radio and television fees).
“After a strong decline in April, resulting from the effects of a high base associated with restoring 5 % VAT rates for basic food products, price dynamics in the category of food and non -alcoholic drinks remained in May relatively stable (5.5 % year to year compared to 5.3 percent in April) year to year in May against 13.1 percent
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PKO Research
In May, he inhibited the price of both goods and services. The dynamics of goods prices decreased to 3.3 percent. year to year with 3.5 percent To a large extent due to the deepening of the decrease in fuel prices. Service inflation remains increased, but it decreased to 6 percent. Year on year from 6.3 percent, i.e. to the lowest level from the end of 2019. Inhibition of price growth, including transport, recreation and culture, restaurants and hotels as well as communications (up to 2.8 percent year on year). Economists assume that with a decrease in the dynamics of remuneration, the increases in prices of services will also inhibit (strictly depend on the rate of wage growth).
Base inflation and momentum brake
According to analysts, base inflation decreased in May to around 3.2-3.3 percent. year on year with 3.4 percent In April, which would mean that it has been at the lowest level since January 2020. “The monthly dynamics of base prices was formed in May at about -0.1 percent, which is similar to its seasonal pattern (approx. 0.0 percent M/MW May), which signals weakening inflationary pressure in the Polish economy,” Credit Agricole experts assessed experts.
“At the same time, a tanted impetus of base inflation, illustrating the current trends of inflationary processes in the base terms, is even lower, between 2.0 percent year on year and 2.5 percent.” – results from the estimates of economists of PKO BP.
Inflation forecasts in Poland. There will be declines
According to experts, the result of inflation from May is the penultimate with the “four” at the front. “A similar level awaits us in June, while in July, due to statistical effects (high reference database from the previous year due to partial frostbite of energy prices for households) and a reduction in gas prices for households announced by the Energy Regulatory Office (by 14.8 %), We will see a slope in the CPI indicator. It will be around 2.7 percent. The following months should bring the inflation rate even lower, to the NBP inflation target area, i.e. 2.5 percent, and stay there even until the end of this year, if there is no energy prices for households from October 1 ” – wrote Monika Kurtek, the main economist of Bank Pocztowy.
She stipulated, however, that she appeared today, in connection with Israel's attack on Iran, uncertainty about the formation of fuel prices (on Friday morning oil prices were temporarily expensive by up to 14 %). “If the situation on global oil markets does not calm down, it may somewhat conquer the CPI estimates indicated above,” she added.
“Despite this risk, we still expect that total inflation will decrease significantly in July this year, then, by the end of 2026, it will persist in the band of permissible deviations from the NBP inflation target (2.5 % ± 1 percentage point).
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PKO Research
“Were it not for the fact that the conflict in the Middle East generates the risk of oil prices and weakening of the zloty, We would be more and more convinced that the inflation rate during the holidays will affect the inflation target of 2.5 percent. and will remain clearly below 3 percent. For the next few quarters” – assessed specialists Santander Bank Polska.
“According to our forecasts, inflation will decrease in the area of the inflation target in July due to the high reference base (partial release of energy prices from July 2024), a reduction in gas prices for households and continuation of the decrease in base inflation. We expect that the Energy Regulatory Office (ERE) will approve in September lower electricity tariffs from currently applicable (PLN 623/MWH) and MWH) Failure to the current maximum price (PLN 500/MWh). – ING Bank Śląski experts wrote. In their opinion, after a decline in July, inflation will remain around the NBP target.
“A faster decrease in inflation in May confirms our belief that in July, CPI inflation will significantly decrease and return to the compartment of permissible deviations from the NBP target, reaching a level slightly below 3 percent year -on -year. At the same time, base inflation will gradually fall, which at the end of 2025 should reach approx. 3 percent year. The economists of PKO BP pointed out.
How will the MPC react? When is the interest rate reduction?
They remained that the MPC would decide on two more discounts (0.25 percentage points each) this year: in September and November. We would like to remind you that in May the MPC made the first change in over a year and a half, lowering them by 0.50 percentage points, to 5.25 percent. in the case of reference. In June, the MPC left the cost of money unchanged. The next meeting will take place at the beginning of July, in August there is no decision -making meeting.
According to ING experts, the MPC has a significant space to relieve monetary policy and start a cycle of foot reductions. “The revision of the May inflation increases the chances that it will start in July, but it seems more likely that the council will want to be sure about the scale of inflation from July, the prospects of electricity prices for households and the shape of fiscal policy in 2026. Therefore, our base scenario assumes that the next reduction will take place in September, when new energy tariffs and the state budget design should be known at 2026. We describe the probability of reductions in July and September as similar “-they wrote. In their opinion, at the end of this year, interest rates may be reduced to 4.50-4.75 percent, and the cycle of monetary policy 2026
According to Bank Pocztowe's economists, the July Inflation projection of the NBP will show CPI estimates similar to market expectations (i.e. – as we mentioned above – assuming decreases in inflation, because the current projection, published in March, assumes an increase at the end of the year), the MPC may decide on another reduction of percentage rates by 0.25 percentage point This month. “In the face of uncertainty, however, he may also want to wait with a reduction until September. For today, it seems that one of these two months is very likely, and then there may be one more cut by the end of this year, also by 0.25 percentage points. – they added.
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CSO, NBP, own study
According to Bank Millennium analysts, today's data constitute an argument for supporters of foot cuts, but “the prospect of looser fiscal policy and the likely lack of determination of the government for fiscal consolidation will increase the Cairy of the MPC in dispensing monetary loosening.”
“Let's read the conference of the President of the NBP after the June meeting of the MPC. In our opinion, the reduction of interest rates in July is still possible, because CPI inflation in the second quarter of this year will be over 1 percentage point lower than the NBP assumed in the March macroeconomic projection, by about 0.8 percentage points than in the projection there will be base inflation. President's narrative after the last meeting of the Council Cutting the feet in July seems less likely. We still see the space to lower the feet this year by 0.50-0.75 percentage points and another 1 percentage point In 2026, although the pace of mitigation of monetary policy remains highly uncertain. The change in the narrative of President Glapiński at the June conference increases the likelihood of a slightly smaller monetary scale by the end of 2026, “they wrote.
“In our opinion, in the current conditions, the central bank will not hurry with interest rate reduction and another rate reduction is only possible after the holidays,” said Santander's experts.
“We expect that after getting acquainted with the results of the SPP projection, it will most likely reduce interest rates by 0.50 percent percentage points in July. Considering the statements of some MPP members in recent days, but we see a significant risk of materialization of the alternative scenario, in which the RPP will decide on a reduction on a smaller scale (by 0.25 percentage points in July), and the next The rate reduction by 0.25 percentage points will not take place in the fourth quarter of this year, “added Credit Agricole experts.
