Polish Inflation Slowed Less Than Expected In July, But Rate Cut Still In Sight

By Adam Antoniak and Leszek Kasek of Think.ING

Thursday, July 31, 2025 7:20 AM EDT

Person Holding Blue and Clear Ballpoint Pen

Image Source: Pexels

Headline inflation fell to 3.1% year-on-year in July from 4.1% in June, yet this was higher than our forecast and market expectations. We don't think this will derail the rate-cut train as disinflation remains on track. We think the National Bank of Poland will continue monetary easing and deliver a rate cut at the next meeting in September.

In July, consumer price growth slowed to 3.1% year-on-year from 4.1% YoY in the previous month, but still exceeded our forecasts and the market's expectations, which called for a reading below 3%. Annual growth in household energy prices eased to just 2.4% YoY from 12.8% YoY in June due to a higher reference base, as household energy prices jumped sharply in July 2024. This July, lower regulated prices for natural gas came into force, but at the same time, the electricity capacity fee was restored, which boosted overall energy bills. As a result, prices in the “electricity, gas and other fuels” category increased by 1.1% month-on-month. Fuel prices rose by 3.5% MoM after five consecutive months of declines, beating our estimate, but they were still some 7% lower than last year. The upswing was linked to market turmoil stemming from a temporary escalation in Middle East tensions. Prices of food and non-alcoholic beverages fell 0.6% MoM, maintaining annual growth at 4.9%. Food prices typically decline during the summer months, though this seasonal pattern has weakened in recent years.

Polish inflation declined substantially in July

CPI and its sources, %YoY, percentage points

Source: GUS, ING.

The sharp decline in CPI inflation was not surprising; however, we had hoped for an even deeper slowdown. We expect that in August, inflation will ease further towards the central bank target of 2.5% (+/- 1 percentage point) and stay broadly stable at low levels in the coming months. Higher-than-expected CPI in July does not change the generally positive disinflationary trends, and the Monetary Policy Council (MPC) has substantial room for further rate cuts. We believe the Council will cut policy rates at its next meeting scheduled for September.

More By This Author:

FX Daily: Powell’s Tough Talk Powers Dollar Rally
The Commodities Feed: Tariff Developments Roil Commodity Markets
Fed Acknowledges Slowing U.S. Economy As Two Vote For An Immediate Rate Cut

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. ING forms part of ING Group (being for this purpose ING Group NV and its subsidiary and affiliated companies). The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.

The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.

Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved. ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam). In the United Kingdom this information is approved and/or communicated by ING Bank N.V., London Branch. ING Bank N.V., London Branch is deemed authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.. ING Bank N.V., London branch is registered in England (Registration number BR000341) at 8-10 Moorgate, London EC2 6DA. For US Investors: Any person wishing to discuss this report or effect transactions in any security discussed herein should contact ING Financial Markets LLC, which is a member of the NYSE, FINRA and SIPC and part of ING, and which has accepted responsibility for the distribution of this report in the United States under applicable requirements.

less

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.