Polish inflation without surprise

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Polish inflation without surprise

Czech producer prices remain calm

August inflation data, released in Poland yesterday, brought markets no surprise. Consumer prices dropped by 0.4 % compared to the previous month, which corresponds to the annual fall of 0.3 %. The outcome was in line with both our and markets´ expectations. Regarding the structure, the most unanticipated component was a 1.3 % m/m growth in communication prices, which, however, had only limited impact on overall headline inflation (because of its small weight in the consumers’ basket). August inflation data did not change our prediction concerning two subsequent official interest rates cuts, each by 25 bps, to be delivered by the NBP in October and November.

Like in Poland, also in the Czech Republic latest inflation data testify to subdued price growth in the CEE region. According to the Czech statistical office, producer prices stagnated in August on monthly as well as annual basis. Overall stagnation does not mean, though, that the prices were not moving at all. In agriculture, producer prices fell by 1 % y/y while, on the opposite side, the strongest price rise was observed in the car industry, where prices increased by almost 5 % annually. No doubt, without depressed energy prices producer, price inflation would have been stronger. In our view, the most recent producer price figures will not affect Czech national bank´s attitude to monetary policy and abandoning of the current FX intervention regime will not come before 2016.