Consumer inflation in June, according to a quick estimate, turned out to be lower (4.4% y / y) than the market predicted (4.6% y / y). Economists point out that the fall in inflation in June was mainly driven by slower fuel price growth due to the fading out of last year’s low base effects and lower core inflation. However, elevated inflation – above 4% – will remain until the end of the year and will decline slightly towards the upper band for deviations from the 3.5% target in 2022.
According to the Central Statistical Office (GUS), consumer inflation amounted to 4.4% on an annual basis in June 2021, according to preliminary data. Compared to the previous month, the prices of consumer goods and services increased by 0.1% in May. According to a flash estimate, prices of consumer goods and services in June 2021 increased by 4.4% compared to the same month last year (price index 104.4), and compared to the previous month increased by 0.1% (price index 100 , 1).
According to economists, rising oil and food prices in the world – including rising grain prices – will increase the inflation level in the coming months. Some economists estimate that at the beginning of 2022 there will also be further increases in regulated prices, including electricity.
Analysts emphasize the fact that core inflation fell in June to the range of 3.6-3.7%. According to economists, in the following months, incl. high prices of commodities, freight, and a strong mismatch between supply and demand will drive up core inflation.
They point out that the possibility of interest rate hikes this year is decreasing. The increase cycle may start next year in Q2.
Below are the most interesting comments from analysts:
“The high jump in the base in June 2020 was due to the imputation of data by the Central Statistical Office (due to the closure of many service outlets), the effect of opening up the economy and increasing the costs of garbage collection. This effect was weaker this year. However, in the following months of this year, the impact of many other inflation factors than just the opening effect, which will support high increases in core inflation. These factors include high commodity and freight prices, and in the following months also a strong mismatch in supply and demand (on the one hand, disruptions in supply chains, on the other – the effect of deferred demand) “- Chief Economist of ING BSK Rafał Benecki, Senior Economist Dawid Pachucki
“However, if the incoming data and macroeconomic projections suggested that inflation could persist at a high level in 2022, and the recovery remained dynamic, even in the event of the fourth wave of COVID-19 behavior in the fall, a scenario in which The Council will raise rates at the end of this year. After today’s release of June’s inflation estimate, the probability of such a scenario has decreased “- senior economist at Bank Pekao Adam Antoniak
“We believe that the perspective of inflation stabilization (but still at high levels in 2022), as well as changes in the composition of the Council in 1h22 will postpone decisions on rate hikes to the middle of next year,” PKO BP analysts.
Source: GUS and ISBnews
