Poland: September inflation stable

Poland.s Central Statistical Office (GUS) today released the consumer price inflation numbers for September. Headline inflation eased a bit from August.s 0.3% m/m to 0.2% m/m in September. This number equates to 1.6% y/y . below the consensus forecast of 1.7% y/y and our forecast of 1.7% y/y.

Today.s stable outcome was a result of, on the one hand, falling transportation costs on the back of lower en-ergy prices in September, which pulled inflation down, and, on the other hand, higher food prices following the very hot summer in Europe that damaged crops and pushed inflation up. The sum of these effects was a slight fall in inflation compared to August.

The numbers come as a small surprise after the rise in inflation over the past couple months, and they should end speculation of a rate hike in October. The Polish central banker, Jan Czekaj, has confirmed our view, say-ing that, .The figures confirm what we have said for some time now . that there is no demand pressure. They (the numbers) do not really bring anything new to the monetary policy picture.. Further, he emphasised putting more weight on the monthly data in the central bank.s quarterly inflation projection due later this month. His remarks somewhat contradict statements earlier today by monetary council member (MCM) Halina Wasilewska-Trenkner, who said that inflation was on the rise, driven by rising wages, employment, con-sumer spending and credit. Another MCM, Miroslaw Pietrewicz, said after the release that .after the Sep-tember inflation data we can seriously think that inflation will not exceed 2.5 percent next year," and he con-tinued, .these figures show that there is no inflationary pressure in the economy. At the moment there is no justification for a change in monetary policy until the middle of next year..

However, we still expect inflation to increase over the coming months and we believe speculation of rate hikes will be back on the agenda again soon despite the fairly low reading in September.
Danske Bank A/S
http://www.danskebank.com/
Source:By Thomas Harr, Lars Christensen, Lars Rasmussen, fxstreet.com