Year on year CPI inched up to 1.3% y/y in September from 1.2% in August. The 0.3% monthly increase in prices was in line with our forecast. The increase in the y/y figure was caused solely by car fuel prices, that surged 2.2% m/m.. The majority of remaining categories showed smaller monthly changes than in the same month last year. Food prices increased by 0.8% m/m, remaining flat at -2.2 % y/y. Clothing and footwear prices decelerated further to –1.1% y/y from -1.0% y/y in the previous month. Yesterday’s data have changed nothing on the picture of the sluggish demand and absent inflationary pressures; in coming months, we don’t expect any change in this respect as well.
The recent increase in producer prices should not translate into higher CPI, as the wage inflation remains low due to weak labour market. The y/y inflation should fall to 1.0% y/y in October thanks to lower excise tax on alcohol, that should shave 0.3 percentage point from the overall y/y figure. Until December, the inflation should rise only moderately to 1.2% y/y. We expect the central bank to cut rates by another 50 bps in November.
Konrad Soszynski, Kredyt Bank, S.A., Warsaw
Jakub Dvorak, Investment Research, CSOB