According to the flash estimate, Poland’s CPI fell to 2.4% yoy in November, dipping below the NBP’s inflation target (2.5%). Both we and the market consensus has anticipated a decline, however smaller, down to 2.6% yoy. Compared to the previous month, consumer prices in November rose by only 0.1%.

Poland’s CPI and core inflation (% yoy)

Source: GUS, NBP, Pekao Research

The lower-than-expected reading resulted from a series of small but broadly distributed surprises across nearly all price categories published in the flash reading. Food prices rose by just 0.1% mom, diverging negatively from seasonal patterns for another month. Energy prices also increased more slowly than expected - also by 0.1% mom - likely due to moderate growth in heating energy costs. As predicted, fuel prices accelerated (2.2% mom), although this occurred amid declining crude oil prices on global markets.

The disinflationary trend was continued by core inflation (excluding food and energy prices), which according to our estimates based on today’s data, fell in November to 2.7-2.8% yoy from 3.0% a month earlier. The last time we observed such low levels of core inflation in 2019.

For the Monetary Policy Council, which is highly sensitive to current inflation data, today’s clearly lower-than-expected reading opens the door to another “adjustment” of interest rates at the December meeting, likely by another 25 bps cut. Both the headline CPI and core inflation in 4Q25 are expected to be lower than the latest NBP projection.

Since the pandemic year of 2020, and through subsequent years marked by various supply crises, inflation has not been able to sustainably approach the inflation target for a longer time. Now the situation is different: throughout 2026, inflation is expected to hover around the 2.5% target. Inflationary pressures remain very low: there is no risk of a rapid rebound in commodity, energy or fuel prices, which will continue to suppress goods inflation, while the gradual easing of wage pressure will continue to limit services inflation.

This may seem counterintuitive, but Poland - despite being one of the fastest-growing economies in Europe and expected to accelerate further in 2026 - is not experiencing significant domestic inflationary pressures simultaneously. One key factor is the persistent negative output gap (a situation where the economy produces below its potential), similar to that observed in the largest Eurozone economies. In the absence of new supply shocks, domestic factors - which are currently acting disinflationary - are increasingly shaping inflation trajectory.