According to the preliminary estimate by GUS, inflation in Poland rose slightly in May to 2.5% year-on-year, with a 0.1% increase compared to April. This aligns with the expectations of most analysts, who predict further inflation increases in the coming months, albeit with varying scales.
Food Prices and Energy Costs
Food prices increased by 1.6% year-on-year and 0.3% compared to April. Conversely, energy carrier prices fell by 1.8% year-on-year and slightly decreased compared to April. Fuel prices rose by 3.6% compared to May 2023 but dropped by 0.3% from the previous month. The reintroduction of the 5% VAT on food has been a significant factor, though its exact impact remains uncertain.
Core inflation, excluding volatile items like food, fuel, and energy, remains elevated but decreased from 4.1% to 3.8% in May. Economist Jakub Rybacki from PIE noted that June might be the last month inflation stays within the National Bank of Poland’s target. He predicts inflation will likely rise to 4-4.5% in July due to the thawing of energy prices and potential wage pressures.
Outlook for the Second Half of 2024
Rybacki anticipates higher inflation in the latter half of the year. Bloomberg’s consensus suggests that by the fourth quarter, inflation could approach 4.7%. The faster price growth affects a wide range of goods and services, with 60% of expenditures experiencing price increases below 5% annually, compared to 80% pre-pandemic. A slight improvement is expected in the coming months due to the rapid rise in service prices.