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Inflation in Poland. NBP July projection

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Inflation in Poland with a 50% probability will be in the range of 11.1-12.7% in 2023, in the range of 3.7-6.8% in 2024, and in the range of 2.1-5% in 2025 1 percent – results from the latest projection of the Economic Analysis Department of the National Bank of Poland. The MPC assesses that the strong tightening of the NBP’s monetary policy leads to a decline in inflation in Poland towards the NBP’s inflation target, the MPC said in a communiqué after the meeting.

On Thursday, a two-day meeting of the Monetary Policy Council ended. According to the NBP in a communiqué after the meeting of the Council, it got acquainted with the results of the July projection inflation.

“According to the projection – prepared with the assumption of unchanged NBP interest rates and taking into account the data available until June 22, 2023 – the annual price growth will be with a 50% probability in the range of 11.1 – 12.7% in 2023 (against 10.2 – 13.5% in the March 2023 projection), 3.7 – 6.8% in 2024 (against 3.9 – 7.5%) and 2.1 – 5, 1 percent in 2025 (compared to 2.0 – 5.0 percent)” – stated in the release.

According to the DAE, dynamics Poland’s GDP with 50 percent probability will be in the range of -0.2-1.3 percent. in 2023, in the range of 1.4-3.3 percent. in 2024 and 2.1–4.4 percent. in 2025

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The projection takes into account data available until June 22, 2023.

New NBP projection

*The central path from the July NBP forecasts was calculated as the middle of the forecast range provided in the MPC statement and may not coincide with the actual central path that will be published by the NBP. Differences may result from asymmetrical distribution of the probability of variables (GDP and inflation) in the forecast horizon.

The Monetary Policy Council maintained the decision on July 5-6 at its meeting all NBP interest rates remain unchanged, the reference rate remains at 6.75%. on an annual basis.

Statement after the MPC meeting

The Council assesses that the economic downturn in the environment of the Polish economy, together with the fall in commodity prices, will continue to have a limiting effect on global inflation, which will also continue to contribute to lower price growth in Poland. The decline in domestic inflation will be driven by weaker GDP growth, including consumption, taking place amid a significant decline in credit growth. The Council assesses that the strong tightening of the NBP’s monetary policy leads to a decline in inflation in Poland towards the NBP’s inflation target.

At the same time, due to the scale and durability of the impact of earlier shocks, which remain beyond the influence of domestic monetary policy, inflation will return to the NBP inflation target gradually.

In previous communiqués, the Council pointed out that the previously implemented strong tightening of the NBP’s monetary policy “will lead” to a decline in inflation towards the target.

The MPC reiterated that its further decisions will depend on incoming information on inflation prospects and economic activity.

The Council maintained that faster inflation reduction would be supported by zloty appreciation, which – in the opinion of the Council – would be consistent with the fundamentals of the Polish economy.

It was added, as before, that the NBP may intervene in the foreign exchange market, in particular in order to reduce fluctuations inconsistent with the direction of the pursued monetary policy zloty exchange rate.

The Council reiterated that the NBP would continue to take all necessary measures to ensure macroeconomic and financial stability, including, in particular, to bring inflation back to the NBP’s inflation target in the medium term.

The MPC recorded a decrease in core inflation for the second month in a row.

“According to the flash estimate of the Central Statistical Office, the annual CPI inflation rate in June 2023 decreased again and amounted to 11.5% (compared to 13.0% in May this year). At the same time, the general level of consumer prices did not change for the second month in a row. The lower year-on-year inflation was mainly due to the decline in the annual growth rate energy prices and, to a lesser extent, food and non-alcoholic beverages and some other categories of goods. Having data of the Central Statistical Officeit can be estimated that core inflation also decreased again in June.

Main photo source: Raketir/Shutterstock



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