According to preliminary data on price increases published today by the Central Statistical Office (GUS) in Poland, inflation in September was 4.9%, nearing the 5% threshold. This is the highest reading since December last year when inflation reached 6.2%. As many as 26% of Polish investors believe that inflation poses the greatest threat to their investment portfolio.
September marks another month where inflation in Poland is on the rise, reminding us of its presence. In March, inflation dropped to a record low of 2% and has been consistently rising since then. Electricity price hikes, introduced on July 1st, pushed inflation above 4%. Inflation was 4.2% in July and 4.3% in August, year-on-year.
Current inflation increases are a result of both ongoing price hikes and the so-called “base effect.” In 2023, inflation plummeted rapidly, so the current level of annual inflation is rising, referencing increasingly lower readings from a year ago. This effect will persist until the end of 2024, which could push inflation above 5% in the coming months.
In August, month-to-month inflation was 0.1%. According to preliminary GUS data, food and energy carrier prices rose by 0.2%, while fuel prices at petrol stations fell by 3.4%, which was a result of falling oil prices on global markets.
The level of inflation remains a key factor in making decisions about interest rate cuts. On Wednesday, we await another decision from the Monetary Policy Council regarding the level of interest rates. Due to rising inflation, there is currently no chance of cuts, and the earliest possible date for such action is the second quarter of 2025. However, rate cuts in the eurozone, the US, and neighboring countries can put pressure on the Polish zloty. In September, the Federal Reserve cut rates by 50 basis points, and the European Central Bank made two cuts in June and September. This could cause the zloty to strengthen with persistently higher rates in Poland.
According to the eToro Individual Investor Pulse survey, inflation is the biggest threat to Polish investors – so says 26% of respondents. They are less concerned about the state of the global economy (20%) and the risk of an international crisis (20%). The state of the Polish economy is the most important issue for only 11% of investors.
Paweł Majtkowski, eToro market analyst
Source: https://ceo.com.pl/inflacja-w-polsce-wzrosla-do-prawie-5-procent-29151
