Polish headline inflation likely to have eased in August on oil prices

Polish headline inflation is likely to have eased in August. According to an Erste Group Research report, the Polish inflation rate is expected to have slowed to 2.8 percent year-on-year in August from July’s 2.9 percent, consistent with market expectations. The growth in food prices is likely to have stayed the main factor pushing up inflation, while oil prices at lower levels compared to a year ago are expected to have lowered the headline figure.

“All in all, the inflation rate is likely to remain above the 2.5 percent target and peak at the beginning of the year. At this point, however, even with inflation going toward 3.5 percent, i.e. the upper bound of the target, we maintain our call for stability of rates”, said Erste Group Research.

Meanwhile, the economy is expected to have grown 4.4 percent year-on-year in the second quarter. The structure might show that the domestic demand continues to be the pillar of growth. In particular, private consumption should underpin strong economic performance in the second quarter.

“The contribution of investments should also be positive. Net exports do not necessarily have to have suffered in the previous quarter, despite the slowing external environment”, added Erste Group Research.