Polish inflation in December estimated at -0.5% y/y

In November 2015 inflation was at minus 0.6 percent year-on-year, which means that December saw a slight reduction in deflation. Prices in December were 0.2 percent lower than in the previous month.

“We estimate that in the next few months CPI will be gradually rising. We expect that inflation will return to positive figures from February,” commented Wojciech Matysiak, an economist from Bank Pekao.

“In our opinion the Monetary Policy Council [RPP] might lower interest rates in March, by 25 basis points. We expect the new composition of the RPP to be more ‘dovish’ in its views,” Matysiak added.

Poland has experienced deflation for the past 18 months, which prompted the Central Bank to take action last year. The current Central Bank base rate of 1.5 percent, implemented in March 2015, is a record low for the country.

Meanwhile Roman Przasnyski, chief analyst of Gerda Broker, believes that the movement in Polish prices over the next few months will be influenced primarily by global crude oil prices.

“If in the next few months we do not see a similar rise in oil prices [as at the start of 2015], deflation may persist, which will give the RPP an appealing reason for lowering interest rates,” Przasnyski explained. (sl/nh)

Source: PAP