Inflation in Poland eased slightly in November, recording a year-on-year rate of 4.7%, a marginal decline from October's 5.0%. Beneath the surface, inflationary pressures persist, especially in core categories such as services, which saw notable price increases.
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The rise in service costs, now exceeding 7% year-on-year, is a key driver of core inflation, which also edged higher to 4.3% in November. On the other hand, the growth in tradable goods prices showed signs of slowing.
The National Bank of Poland (NBP) has warned of potential inflationary challenges ahead, anticipating a surge in energy prices once the current electricity price cap is lifted in late 2025. This shift, combined with a gradual adjustment of regulated prices for gas, water, and sewage, could weigh on consumer sentiment and amplify inflation expectations.
However, some analysts argue that the energy market dynamics may not play out as projected. Forward electricity contracts for 2025 suggest that wholesale prices could remain below current retail levels, potentially limiting the impact of the price cap's removal. There is cautious optimism that mid-2025 could see retail electricity tariffs stabilising, helping to moderate inflationary pressures.
While the broader economic landscape in Poland calls for lower interest rates to stimulate growth, persistently high core inflation underscores the need for a measured approach. The coming months will reveal whether the inflation trajectory provides sufficient room for policy-makers to act decisively.
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