The latest CSO data show that prices of goods and services fell by 1.5 percent in March compared to the same period of the previous year. - After 9 months of continuous acceleration the annual deflation growth rate began to slow down. Deflationary trends are expiring, however, much slower than indicated in the majority of forecasts. It seems that there will be a negative growth rate of consumer prices for a long time - says Łukasz Kozłowski, an expert of Employers of Poland.
Deflation has persisted in Poland for the third consecutive quarter. March of this year can be regarded in retrospect as a breakthrough month in which the rate of decline in prices started to slow down. Even if this is the case, deflation may continue until the end of 2015.
The price drop is mainly the result of external factors. Core inflation excluding energy and food prices continue is still a positive value. Recent data on deflation should not affect the MPC’s decision next month. Polish monetary authorities have made it clear that the easing cycle has been completed. The Council expects that the recent interest rate cuts are sufficient stimulus to stabilize growth in consumer prices over the next few quarters.
The gradual expiration of deflationary processes will contribute to the economic recovery, which - as the economic indicators suggest - begins to gain momentum again. In the coming months the statistical base will be lower, which should help to accelerate the pace of inflation rate approaching zero.
Łukasz Kozłowski, expert of Employers of Poland