Tyrowicz: The data on core inflation shows something interesting

Core inflation should be heading towards 2% – wrote Joanna Tyrowicz, member of the Monetary Policy Council, on LinkedIn.

“The core inflation rate should not take root around 3 percent, but should continue to slowly move towards 2 percent.” – she wrote.

According to Tyrowicz, there is something interesting in the core inflation data.

“From mid-2023, actual core inflation began to decline faster than forecasts assumed. A year ago, NBP projections suggested around ~4% at the end of 2025. Meanwhile, the data showed rather ~3%. This is still 3x above the long-term average, but the direction turned out to be more favorable than the models predicted,” she wrote.

In her opinion, several mechanisms contribute to the positive surprise: the strengthening of the zloty, cheaper imports of goods (especially from China), the lack of announced excise tax increases, changes in the consumption basket and the fact that the data clearly show a downward trend that the models were unable to capture for a long time. In other words: the economy performed better than the “historical patterns” built into the forecasts.

She estimates that the downward trend in inflation due to imports of goods from China will last until April/May. (PAP Business)

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