Fuel prices might have reached a temporary bottom

Erste Bank Research Team Erste Bank

On the radar

Yesterday, the National bank of Poland kept the policy rate unchanged at 5.75%.
There are no other releases today.

Economic developments

Since mid-summer, drivers in CEE have experienced a consistent decline in fuel costs at gas stations. Among all CEE countries, nearly all report an annual decrease in NAT95 prices when converted to euros. Poland is the sole exception due to the base effect, as Orlen temporarily reduced their fuel prices exactly a year ago, diverging from the peers in CEE. The current decline is primarily attributed to the drop in oil prices, with Brent oil decreasing from $88 per barrel in July to $70 at the beginning of September. However, recent tensions in the Middle East have exerted upward pressure on oil. Since the end of last week, Brent oil has surged from around $71 to $76, in response to the escalating conflict between Israel, Iran, and Lebanon. While it is premature to assess the medium-term impact of the conflict on oil prices, we foresee an upside risk to higher prices at gas stations in CEE. Such a scenario would, in turn, exert upward pressure on inflation dynamics, which have so far benefited from declining fuel costs.

Market developments

The escalation of the conflict in the Middle East has increased risk aversion in financial markets, negatively impacting CEE currencies. The Hungarian forint proved to be the most vulnerable, weakening towards the EURHUF 400 level. The central bank has already signalled to the market that they will be careful in their interest rate policy supported by tightening of liquidity in 2025. The Czech koruna also slightly weakened, while the Polish zloty remained relatively strong. The strength of the zloty was supported by the central bank’s decision to keep rates unchanged. The NBP is the only central bank in the region that has not cut rates this year. Consequently, forward points on EURPLN have been rising (unlike EURHUF or EURCZK), providing more reward and cushion to investors going long on PLN.

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Erste Bank Research Team

Erste Bank

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