Polish headline inflation likely accelerated further in January, GDP growth likely decelerated in Q4 2019

The Polish inflation data for the month of January is set to release later this week. According to an Erste Group Research report, the headline consumer price inflation is likely to have accelerated further and leave the central bank’s target range.

“We see the CPI at 4.0 percent y/y (0.5 percent m/m) in January, marginally below the market consensus at 4.2 percent y/y, said Erste Group Research”.

Food and services prices are expected to have remained the key factors that keep pushing the figure up. Unless the figure lands above market expectations, there should be no solid reaction on the bond or FX market. During the NBP’s meeting last week, the MPC stated that inflation might possibly overshoot the target in the months ahead, but this should not trigger any rate reaction. Stable rates are expected until the end of 2021 and possibly beyond.

Meanwhile, the fourth quarter GDP growth data is also set to release later this week. The real economy data in the fourth quarter imply still strong GDP dynamics of around 3.5 percent year-on-year, but the FY19 figure indicates towards a stronger than expected slowdown.

“We see the economic growth at 3.1 percent y/y in the last quarter of the year. We keep our FY20 forecast at 3.0 percent”, added Erste Group Research.