Final inflation data in line with the flash estimate
In accordance with the final data, CPI inflation in Poland declined from 2.5% YoY in November to 2.4% in December, in line with Statistics Poland’s flash estimate, reaching the lowest level since April 2024. Inflation was driven down by slower growth in the prices of food and non-alcoholic beverages (2.4% YoY in December vs. 2.7% in November). Such slower growth in turn resulted from slower growth in the prices of butter (-11.6% YoY in December vs. -4.4% in November) caused by a sharp increase in the supply of milk reported by the largest global exporters of dairy products. Headline inflation was also driven down by the falling prices of fuels (-3.1% YoY in December vs. -1.9% in November). Higher core inflation, which we estimate to have increased from 2.7% YoY in November to 2.8% in December, had the opposite impact. The rise in core inflation was driven by stronger price growth in “miscellaneous goods and services” and “furnishings, household equipment and routine household maintenance” categories. Notably, core prices went up by 0.1% in December, in line with their seasonal pattern. In our view, this points to weakening inflationary pressures.
Inflationary pressures keep easing
Particularly noteworthy about December inflation data breakdown is the slowdown of growth in the prices of services seen for the sixth month running, from 5.3% YoY in November to 5.2% in December. Consequently, even though it is still much higher compared with the prices of goods (1.3% YoY in December vs. 1.4% in November), its decline suggests that inflationary pressures are gradually easing. We expect headline inflation to run close to the inflation target over the coming quarters. In Q4 2026, inflation will accelerate to 3.3%, mainly due to low base effects in food and fuel prices. As we expect inflation to fall temporarily below the inflation target in Q1 2026, to a local minimum of 2.1% in February, we maintain our scenario in which the MPC will move forward with one more 25bp interest rate cut in March 2026 (see MACROpulse of 14/01/2026). Consequently, the reference rate will stand at 3.75%.
In our opinion, today’s data on inflation will be neutral for the PLN and the yields on Polish bonds.
