During the May press conference, National Bank of Poland (NBP) President Glapiński elaborated on the arguments presented in the Monetary Policy Council (RPP) meeting statement, which created room for monetary policy adjustment this month.
Lower current inflation and improved inflationary outlook
In the first quarter of 2025, inflation stood at 4.9% year-on-year, which was 0.5 percentage points lower than expected, partly due to the update of the inflation basket by the StatOffice (GUS). Additionally, despite the increase in administered prices (water, sewage, excise duty on cigarettes), core inflation also decreased. In April, headline inflation dropped significantly (to 4.2% YoY), largely due to the VAT increase on food in April 2024 (high reference base). Lower oil prices on global markets, a weaker US dollar, and a strong zloty also improve the inflation outlook.
Easing wage pressure
The pace of wage growth in the enterprise sector slowed to 7.7% YoY in March, which was noticeably lower than in previous months, although still higher than productivity growth.
Softer data on economic growth
In the first quarter of 2025, economic conditions were somewhat weaker than expected. Both industrial production and retail sales prints fell short of expectations. As a result, GDP growth in the first quarter of 2025 will be slightly lower than in the fourth quarter of 2024.