Producer prices keep steady in CEE

• 3Q23 GDP growth in Slovakia was confirmed at 1.1% y/y.

• In Romania, PPI index landed at -2.2% y/y.

• Today, retail sales growth for October will be published in Czechia, Hungary, Romania and Slovakia.

• In Hungary, industrial output will be published as well.

• Poland is expected to keep policy rate unchanged.

Economic developments

In October 2023, industrial producer prices rose by 0.2% m/m in both the euro area and the EU, while in y/y terms industrial producer prices decreased by 9.4% in the euro area and by 8.7% in the EU. In the region producer prices declined by -0.2% m/m (CEE8 average) in October 2023. Looking across the countries, producer prices declined in most of them apart from Poland, Romania and Slovakia, where producer prices were higher in October 2023 compared to the previous month. Over last two years, the costs of production increased tremendously, however after years of rather sideway trend (between 2015 and 2020). Currently, producer prices are 73% higher compared to 2015 (producer prices index in CEE8 was 172.9 in October 2023).

Market developments

As for the CEE currencies, the Czech koruna and the Hungarian forint weakened since the beginning of the week while the Polish zloty gained marginally against the euro. On the bond market, we see continuation of the yields decline as inflation keeps falling and the market expectations for major central banks to begin with monetary easing are shifting. Polish central bank is expected to keep policy rate unchanged. More interesting news came from the S&P rating agency that suggested that Poland’s credit rating could benefit from unlocking the EU funds. In Slovakia, the government plans to impose the 30% additional tax on banks to improve the tax revenues and reduce the budget deficit next year.

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