Poland’s inflation falls below NBP target in December

According to Polish Ministry of Treasury inflation will also remain low in 2013. Poland’s consumer inflation decelerated to 2.4% y/y in December 2012 from 2.8% y/y in November, thus arriving at 0.1 pp below the National Bank of Poland (NBP) target of 2.5% for the first time since August 2010.

For the better part of 2011 and H1 2012 the Polish inflation fluctuated around 4%, outside of the +/- 1 pp range of allowable deviations from the target, raising concerns of the Monetary Policy Council members and many economists. And now CPI is below the target and likely to further decrease. This means new conditions for Poland’s economy as well as a new paradigm for the Polish rate setters.

The expected stagnation of domestic demand, and consequently the lack of price pressures, will continue to work towards further lowering of Poland’s inflation figures, both CPI and net inflation, in the first half of 2013, economists forecast.

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