In March 2026, consumer prices in Poland were 3.0% higher than a year earlier, according to Statistics Poland’s flash estimate. Compared with February, prices rose by 1.0%. The strongest upward pressure came from fuel prices, which jumped 15.4% month on month, bringing inflation back into sharper focus after two months of relatively moderate readings.
The March data came against the backdrop of a sudden oil market shock. Following the outbreak of war in the Middle East and the disruption of crude shipments through the Strait of Hormuz, Brent prices rose by more than 37% over the course of a month, while WTI climbed by nearly 47%. These increases quickly fed through to fuel prices at petrol stations. In response, the Polish government introduced temporary tax relief. VAT on fuels was cut from 23% to 8% for the period from March 31 to April 30, 2026, while excise duty on selected fuels was also reduced between March 30 and April 15 to the minimum level permitted under EU rules, lowering the tax burden by 29 groszy per litre of petrol and 28 groszy per litre of diesel. According to government estimates, the VAT cut will cost the state budget around PLN 930 million, while the excise reduction will reduce revenues by roughly PLN 400 million.
Joanna Tyrowicz, a member of the Monetary Policy Council, argues that although fuel prices are beyond the direct control of the central bank, this does not absolve policymakers of the responsibility to limit the broader economic impact of such shocks. In her view, energy price swings tend to be temporary if the rest of the economy remains stable, especially if services inflation, goods price dynamics and food prices are already under control. The real danger appears when inflation processes are not fully anchored before an external shock hits.
The latest breakdown suggests that the fuel surge has not yet fully spilled over into other major components of the inflation basket. Preliminary data show that fuels and lubricants for private transport rose by 8.5% year on year and by 15.4% compared with February 2026. At the same time, housing-related energy prices were up 3.9% year on year but fell 0.1% month on month. Food and non-alcoholic beverage prices were unchanged from February, although they were still 2.0% higher than a year earlier.
Even so, the March reading marks a noticeable shift from the start of the year. In both January and February 2026, annual CPI inflation stood at 2.1%, remaining comfortably within the National Bank of Poland’s inflation target range of 2.5% plus or minus 1 percentage point. That still meant inflation was technically within the acceptable band, but the March acceleration shows how vulnerable the headline figure remains to external shocks, especially in commodity markets.
Tyrowicz warns that headline inflation may have given a misleading sense of comfort even before the latest geopolitical escalation. In her assessment, the key problem has been persistently high services inflation, which reflects domestic cost pressures rather than imported volatility. Data show that service prices in February 2026 were 4.8% higher than a year earlier, a level that remains significantly above the long-term norm and points to continuing inflationary pressure inside the Polish economy.
From early 2024 until August 2025, service price growth stayed broadly in the 6–7% annual range. Although inflation in domestic services and consumption eased somewhat during 2025, the contribution of services to overall inflation barely changed, falling only marginally from 1.7 percentage points to 1.6 percentage points. This suggests that the disinflation process has been unusually slow, especially given that interest rates remained at relatively elevated levels for a prolonged period.
She also notes that low goods inflation was supported by two factors that may prove temporary: a relatively weak US dollar and rising shipments of Chinese goods to European markets. Both were linked to geopolitical and trade-policy decisions, particularly the United States’ approach to trade with China. Because these forces can reverse quickly, they should not be treated as a stable basis for monetary policy decisions. By contrast, elevated inflation in domestic services is a more reliable signal of underlying price pressure because it is rooted in local economic conditions.
This is why the debate over interest rates is becoming more contentious. The Monetary Policy Council cut the reference rate by 0.25 percentage points in March 2026, bringing it down to 3.75%. Other key rates were adjusted accordingly, reflecting a gradual shift toward monetary easing.
Tyrowicz openly disagrees with the direction of policy easing. In her assessment, interest rates should be higher, not lower, especially at a time of heightened geopolitical uncertainty. She argues that a neutral rate for the Polish economy is roughly 4.5–4.75%, meaning the current 3.75% level may be too accommodative given the persistence of domestic inflation pressure. If services prices are still rising too quickly relative to the long-term average, then policy should remain in restrictive territory rather than moving toward further easing.
The March inflation figure therefore presents policymakers with a more complicated picture than the headline number alone might suggest. On paper, inflation remains close to target. In practice, the combination of an external oil shock and sticky domestic services inflation suggests that price stability is still not fully secure. For the Monetary Policy Council, the challenge is no longer just whether inflation is within the formal target band, but whether the economy is resilient enough to absorb new shocks without reigniting a broader inflation cycle.
