Inflation in the euro zone increased in July to 2.6 percent year-on-year from 2.5 percent in June. In the entire European Union, to 2.8 percent from 2.6 percent. That is, not much overall. However, there is a large range within the Community, both in terms of the level of the indicator and its change. There are countries where inflation has fallen, sometimes very significantly – as in Denmark, from 1.8 to 1 percent (which is one of the countries with the lowest inflation), or Spain, from 3.6 percent to 2.9 percent. There are also those where inflation is rising, and Poland is in this group. In first place.
Inflation in Poland accelerated the most in the EU
As reported by Eurostat, HICP inflation in Poland in July was 4 percent year-on-year. In June, it was 2.9 percent. So we have a jump of as much as 1.1 percentage points. And this is definitely the highest jump among the 14 EU countries that recorded an increase in the index. In the case of many of them, the increase was small. By 0.1 percentage points (Germany, Lithuania, MaltaNetherlands), by 0.2 percentage points in France, by 0.3 percentage points in the Czech Republic and Sweden. Inflation grew more strongly in Greece, Hungary and Romania – by 0.5 percentage points, by 0.6 percentage points in Slovakia and by 0.7 percentage points in Estonia and Italy.
Off the podium, but we're catching up with Hungary
Despite such a strong increase in inflation, Poland did not make it to the top of the list of countries with the highest level of the indicator. But we are close behind. Hungary is ahead of us with 4.1% year-on-year, Belgium is higher with 5.4% and Romania with 5.8%. You can read about the data here here.
Another important caveat: Eurostat, when preparing the report, takes into account HICP inflation – this is a different measure than the one we most often see in the monthly data of the Central Statistical Office, i.e. CPI. Hence the data differs slightly (but it is the Central Statistical Office that calculates both and sends them to Eurostat). CPI inflation in Poland amounted to July (year-on-year) to 4.2 percent from 2.6 percent in June.
The final reading of inflation data in the eurozone confirms the preliminary one. Despite the upward movement, the market still expects the European Central Bank to cut interest rates in September. Such expectations of rate cuts are becoming increasingly common around the world, with the US central bank at the forefront.
As for Poland, so far everything (including statements by NBP representatives) has indicated that we may not see any cuts until the end of next year. The narrative among the Monetary Policy Council members seems to be slowly changing. Its chairman and the president of the NBP, Adam Glapiński, suggestedon Tuesday, August 20, that it is not impossible that interest rates in Poland will fall earlier than in 2026. He immediately added conditions to this: a discussion on changes in rates may begin “when there is certainty that inflation will peak and forecasts show that it is falling permanently towards the target”. As Pekao experts note, Glapiński “said at the beginning of July that such a possibility can be forgotten”.