The CPI inflation rate in April was 2.4% year-on-year. This reading is in line with market consensus. At the same time, inflation began to rise again compared to the March reading, where it was 2%. On a monthly basis, there was a 1% increase in prices.
It was certain that the inflation index would not decrease this month. This was largely due to the reinstatement of the higher VAT rate on food. Although the inflation reading shows that the “price war” is still ongoing, some discount stores are holding back from raising prices on certain products. Therefore, the overall effect of reinstating the higher VAT rate is spread over time and will still be visible in May. The higher inflation in April also resulted from rising fuel prices.
In April, however, we observe a further decline in core inflation, which likely reached close to 4% year-on-year. Overall, today’s readings can be seen as positive, but they do not impact the outlook for interest rates. There is still a considerable amount of time until the first rate cuts.
Bartosz Wałecki, Analyst at Michael / Ström Brokerage House
