Fuels fuelled Poland's March inflation
Poland’s consumer inflation (CPI) surged in March to 3.0% yoy, mainly driven by rising fuel prices (+15.4% mom). Apart from the fuels, price pressures remain limited for now – core inflation and food prices are stable. In turn, in April we expect CPI to decline to around 2.5% yoy because of the government program reducing indirect taxes on fuels. Therefore, the March 3.0% yoy reading could represent a local peak this year. The Monetary Policy Council will remain cautious amid elevated uncertainty, and we do not expect interest rate changes in 2026.
According to the flash estimate, Poland’s consumer inflation jumped to 3.0% yoy in March from 2.1% in February. Compared with the previous month, consumer prices rose on average by 1%, but this was mostly a “pure” effect of higher fuel prices resulting from the crude oil crisis in the Persian Gulf. However, the flash reading surprised on the downside compared to market expectations – this surprise resulted from a lower reported increase in fuel prices by the Central Statistical Office (+15.4% mom vs. >20% from petrol station-level data). With such sharp movements, discrepancies are common, and revisions in the final release in mid-April cannot be ruled out.
CPI vs. core inflation (% yoy)
Source: Statistics Poland, NBP, Pekao Research
Decomposition of the March CPI acceleration (% yoy, pp.)
Source: Statistics Poland, Pekao Research
Food prices were a positive surprise, remaining stable month-on-month in March. While concerns exist that the current energy shock could spill over into food prices, we believe its impact will be limited due to high global supply, which has so far acted as a disinflationary factor. The main risk channel remains fertilizer prices – their increase, driven by rising oil and gas prices amid the Middle East conflict and tensions around the Strait of Hormuz, may gradually raise agricultural production costs.
For now, however, the impact of geopolitical factors is visible only in fuel prices. Other components of the consumer basket have not yet reacted to the energy shock, in line with expectations. Core inflation remains stable, hovering around 2.5–2.6% yoy in March.
In April, we expect a clear decline in CPI – the recently introduced government program reducing indirect taxes on fuels alone should reduce the headline indicator by about 0.6 pp., bringing CPI closer to 2.5% yoy. Therefore, the March 3.0% yoy reading could be a local peak this year.
In a scenario of a prolonged fuel crisis, second-round effects should be considered, which may gradually spill over into other categories. For this reason, we do not expect interest rate changes this year. The Monetary Policy Council will remain cautious amid elevated uncertainty. Market pricing for rate hikes in response to the supply shock has likely been excessive. The overall impact of the shock on inflation and economic growth is expected to be smaller than in 2022, when the energy shock coincided with post-COVID demand pressures.
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