PL: Oil prices not reflected in June’s flash estimate

The latest flash estimate for consumer price inflation has been published, reporting a year-on-year increase of 4.1%. This figure slightly exceeds market consensus and aligns with our internal projections. On a monthly basis, prices rose marginally by 0.1%. June marks the final month of elevated inflation, as the base effect from last years surge in energy prices is expected to dissipate in July.

Among the categories included in the flash release, prices for food and non-alcoholic beverages increased by 0.1% m/m, resulting in a 4.9% y/y rise. Household energy prices declined by 0.3% compared to May; however, due to the base effect, the annual increase remains substantial at 12.8%. Of particular interest is the category Fuels for personal transport equipment. Despite heightened geopolitical tensions in the Middle East and a corresponding spike in global oil prices, the category has shown limited responsiveness, despite a significant increase in fuel prices at the end of the month. According to GUS, the fuel prices declined by 1.3% m/m, contributing to a -10% y/y decrease. Core inflation is estimated to remain relatively stable at approximately 3.4% y/y.

Looking ahead, we anticipate a significant decline in annual inflation beginning next month, as energy prices have remained stable since July 2024. We project the headline inflation rate to fall to around 2.7%, with a modest upward trend expected toward the end of the year. Under our baseline scenario, annual inflation is not expected to exceed 3% until the end of 2026.