Polish headline and core inflation rates have re-accelerated, with seasonally adjusted monthly rates now clearly above the National Bank of Poland's (NBP) inflation target, according to Commerzbank’s Tatha Ghose [1]. In July, Polish CPI inflation rose to 3.0% year-on-year from 2.5% in June, matching consensus expectations. This acceleration was primarily driven by a 13.9% month-on-month surge in passenger fuel prices, which pushed annual fuel inflation to 15.8% from 5.3% in June [1].
Core inflation indicators also showed upward movement. The NBP's main core measure, which excludes food, drinks, fuel, and energy, increased to 3.1% year-on-year in July from 3.0% in June. The 15% trimmed mean remained at 2.8% year-on-year, while other core measures, such as the index excluding regulated prices and the index excluding the most volatile prices, accelerated to 2.8% and 3.4% year-on-year, respectively [1].
Commerzbank notes that the more relevant seasonally-adjusted month-on-month inflation rates have sharply re-accelerated in June and July, now standing clearly above target. As a result, earlier signals from NBP Governor Adam Glapinski about possible rate cuts are now considered obsolete [1]. Despite the inflation surge, the NBP is turning hawkish more slowly than inflation is rising. This lag is viewed as negative for the Polish Zloty (PLN), as the central bank is likely to signal unchanged rates for a longer period, which may not satisfy the foreign exchange market [1].
CONCLUSION
The Polish Zloty faces pressure as inflation accelerates faster than the central bank's policy response. With rate cuts now off the table and the NBP's hawkish shift lagging behind inflation, market sentiment towards the PLN remains negative.