On Tuesday, the Central European currencies edged lower. While the forint ignored inflation figures for October – year-on-year inflation fell a bit more than expected (6% vs. 6.2%) in Hungary – the zloty weakened by 0.6% and thus breached both 200 days moving average and resistance at EUR/PLN 4.17 and hit more than two-month low.
Today, the regional focus might be on the Polish inflation figures. Year-on-year inflation in Poland fell significantly in October and hit its lowest level since December 2010, according to our forecasts; however, a base effect had a crucial impact on that decline. Prices went up by 0.7% m/m in October last year, while we believe that this year’s rise was approximately half that value (+0.4% m/m).
Food prices probably rose slightly less than usual in October, as did clothing and shoe prices, where, surprisingly, the rise already was very low in the previous
month. As for the possible market impact, we do not expect any significant price action after the release as the market already expects monetary easing to continue in months ahead.