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Polish Inflation Slows to 6.2% y/y; German Economy Stalls, US Retail Sales Surprise

ECONOMYPolish Inflation Slows to 6.2% y/y; German Economy Stalls, US Retail Sales Surprise

Consumer inflation in Poland ultimately slowed down to 6.2% year-on-year (y/y) from 6.6% y/y in November, which is a slight upward revision compared to preliminary estimates of 6.1% y/y. The slowdown in food prices (5.5% compared to 6.9% in November) was the main factor contributing to the lower y/y growth. Month to month, consumer inflation rose by 0.1% in line with market and preliminary estimates (0.7% month on month in November). Core inflation fell as expected to 6.9% y/y in December (7.3% y/y in November), reaching its lowest level since March 2022.

According to preliminary estimates, the German economy slowed down last year by 0.3% (after a revised growth of 1.8% in 2022). Consumer inflation in Germany ultimately increased in December, in line with preliminary estimates. However, the acceleration to 3.7% y/y was primarily due to the effect of government energy aid for German households at the end of 2022. In contrast, retail sales in the United States surprised with stronger growth in December (0.6% month on month compared to the estimated 0.4% month on month). Strong data also came from the US labor market, where the number of new unemployed reached its lowest level since September 2022.

The Euro weakened against the US dollar from around 1.095 USD/Euro to 1.085 USD/Euro. The Polish zloty weakened against the Euro and was trading above the level of 4.40 PLN/Euro for part of the week. On Friday morning, the zloty was just above the level of 4.38 PLN/Euro. The Polish currency also recorded losses against the US dollar. Trading moved to a level above 4 PLN/USD.


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