June was another month in which there was a deflation in the prices of
consumer goods and services in m/m terms. CPI dropped by 0.4% m/m which
translated into its annual change of 1.6%.
The most important deflationary
factor in monthly terms was the decline in prices of food and non-alcoholic
beverages, amounting to as much as 1.4%. In turn in annual terms, the
greatest drop in prices related to the category of car fuels. This amounted
to 3.2% y/y. Prices that are affected by regulation and high monopolisation
maintained high pace, nevertheless, in y/y terms, they slowed down as well.
Cost of running the home and energy utilities went down to 5.8% from 5,9% in
May. The continued weak domestic demand was reflected in the drop in the
prices of clothing and footwear amounting to 0.1% m/m and 0.9% y/y.
According to the NBP, there was an increase in the euro exchange rate of
3.9% and a decline in the dollar exchange rate of 0.5%. Since crude oil
purchase transactions are mainly calculated in dollars, the above changes in
the exchange rate did not translate into higher domestic prices of oil.
However, in July, when the zloty weakened against the EUR, as well as
against the USD, there should be a resulting increase in fuel prices and
transport costs. Thus in June the CPI probably reached its lowest value of
Despite the faviorable data, the appointment of the new finance minister
squanders chances for a rate cut this week.
Jakub Dvorak, Investment Research, CSOB