This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
Interactive chart The reading can be seen as a negative surprise. Prices rose faster than in March, when inflation stood at 3%. This is despite the government’s “Lower Fuel Prices” (CPN) program, which may have reduced inflation by around 0.5 percentage points.
April’s price growth therefore likely reflects higher core inflation. In other words, some firms have probably already begun to raise prices. Such “price list adjustments” may stem from lessons learned during the 2021–23 inflation crisis. At that time, firms that were too slow to pass on rising costs first faced strong pressure on margins, and then increased competition from those that raised prices more quickly.
Interactive chart April inflation remains within the National Bank of Poland’s target band, defined as 2.5% ±1 percentage point. The current real interest rate – i.e., the nominal rate minus inflation – stands at 0.55%. This is a low level given the Monetary Policy Council’s stance in recent years. A few months ago, NBP Governor Adam Glapiński indicated that the optimal range for the real interest rate is around 1–1.5%.
The current situation in energy commodity prices can still be viewed as temporary, so a rate hike in May is unlikely. However, the longer it persists, the higher the probability of an increase. April’s data already point to so-called second-round effects, meaning that price increases are spreading across the economy. If oil and gas prices do not fall materially in the coming months, rate hikes could emerge in the second half of the year.