August CPI turned out to be slightly higher than the consensus forecast expected, albeit it was in line with forecast:
* August CPI 3.7%y/y vs 3.6% expected and 3.6% in July
Housing, hotels & restaurants and other services were the main inflation drivers in August, signalling sticky prices in the services sector.
The central state budget deficit widened to PLN 15.6bn in August from PLN 15.0bn in July or 57.5% of the full-year target.
August headline CPI inflation supports the case for leaving interest rates unchanged at the upcoming monetary policy meeting. The budget deficit is on track to meet the amended deficit target of PLN 27.2bn. In sum, the data releases are market neutral in our opinion.