A senior National Bank of Poland official said second-round inflation effects in the country remain small or barely visible, though he warned the risk of broader pass-through grows the longer the current energy shock persists.
Core inflation still contained
Jacek Kotłowski, Director of the Department of Research and Analysis at the National Bank of Poland, told a press conference that indirect effects on core inflation are currently limited. “At the moment we see only a small degree, or not at all, indirect effects, i.e. pass-through to core inflation,” he said. “The longer the (energy) shock lasts, the greater the risk of pass-through of energy price increases to other components, including food prices.”
Polish inflation returned to 3.5 percent in October, moving back above the central bank’s target range. Preliminary data reportedly showed core inflation falling again, which Kotłowski said points to limited pass-through so far.
Services and goods diverge
He said the services component itself is declining. Competitive pressure from China and weaker real wage dynamics are cited as forces working against broader price pressure.
Kotłowski said the rise in core inflation assumed in the central bank’s projection will probably materialise but has so far been at least moderate, and could ultimately come in lower than projected because the starting point was slightly lower than expected. He noted that two months earlier, the outlook on second-round effects had looked more pessimistic.
Separately, US annual inflation stood at 3.7 percent in September, near its 31-day high.
Source: National Bank of Poland | Data: FRED — St. Louis Fed
