Core Inflation in Poland Hits Lowest Level Since 2021

In April 2024, core inflation in Poland decelerated to 4.1% year-on-year (y/y), the lowest level since the third quarter of 2021, according to data released by the National Bank of Poland (NBP). Despite this slowdown, prices excluding energy and food surged by 0.7% month-on-month (m/m), marking the most significant monthly increase since April last year.

The NBP detailed various measures of core inflation. Year-on-year inflation, excluding administered prices subject to state control, rose to 2.3%, up from 1.8% the previous month. After excluding the most volatile prices, the rate was 3.5%, slightly higher than 3.4% in March. Notably, the core inflation rate, which excludes food and energy prices, fell to 4.1% from 4.6%. Additionally, the 15 percent trimmed mean inflation, which removes the influence of the 15 percent of items with the most extreme price changes, increased to 3.0% from 2.8% in the previous month.

An analyst from fintech company Cinkciarz.pl commented on these figures, noting that the current price momentum remains elevated. He observed that core inflation, after peaking at 12.3% y/y last year, is now nearing the end of its deceleration phase. Despite the recent decline, prices excluding energy and food showed a significant month-to-month increase, indicating persistent price pressures.

Sawicki emphasized that the elevated price momentum is driven by robust demand for critical services and a potential revival in consumption. He predicts that core inflation will hover around 4% y/y and might even accelerate slightly in the second half of the year, potentially reaching 5% y/y. This persistent inflation could argue against any near-term interest rate cuts by the NBP.

Regarding currency forecasts, Sawicki and his colleagues at Cinkciarz.pl anticipate that the Monetary Policy Council’s stance will benefit the Polish zloty. Despite a decrease in the real interest attractiveness of the Polish currency as CPI dynamics rise, the lack of room for rate reductions and relatively strong economic growth will distinguish Poland in the global context of monetary easing. They forecast the euro to zloty exchange rate to stabilize around 4.25. However, they caution that the recent market euphoria due to a weakening U.S. economic situation and potential rate cuts by the Federal Reserve may be short-lived, with the path to sustained monetary policy changes likely to be complex.

Implications for Banking and Business

Developments in the Polish banking sector affect businesses operating in the country in several ways. Access to corporate banking services, credit availability, deposit rates, and payment infrastructure are all critical factors for companies — whether established Polish firms or foreign-owned entities entering the market.

For foreign entrepreneurs setting up operations in Poland, choosing the right banking partner is a strategic decision. Major Polish banks including mBank, ING Bank Śląski, Bank Millennium, PKO BP, and Santander Poland offer varying levels of service for international clients, including English-language online banking, multicurrency accounts, and dedicated relationship managers for corporate clients.

The Polish banking market is well-regulated by the KNF (Financial Supervision Authority) and participates in the EU deposit guarantee scheme (BFG — Bank Guarantee Fund), providing deposit protection up to EUR 100,000 per depositor per institution. This regulatory framework provides stability and confidence for businesses maintaining corporate funds in Polish banks.

If you are doing business in Poland or considering entering the Polish market, Zalewski Consulting can help. Learn more about our VAT and tax advisory, or contact us for a free consultation.