Poland economy – Inflation slows to 1% in March

Event

Consumer price inflation rose by just 1% year on year in March, which brought the average rate for the first quarter to 1.3%, the lowest in seven years.

Analysis

After growing by 1.7% in January and 1.3% in February, headline inflation fell below market expectations in March, and it remains well under the lower limit of the 1.5-3.5% target range set by the monetary policy council (MPC) of the National Bank of Poland (NBP, the central bank).

The main drag on headline consumer price inflation in March was a moderation in food price inflation, with prices in this category growing by 1.5% year on year, down from 2.7% in February, alongside an ongoing decline in transport costs (including the price of fuel), which declined by 2.3% year on year in March, virtually unchanged from February. Conversely, the price of alcoholic beverages and tobacco continue to exert upward pressure – growing by 3.6% year on year, up from 3.4% in February, largely because of the impact of recent rises in excise duties, which took effect on January 1st 2013.

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