The first figures of the CSO for April 2025 confirm the fall in inflation. The consumer price index (CPI) was 4.2%, which means a clear inhibition compared to the first 4th erstwhile inflation remained at 4.9%. What affected this change and will the downward trend continue?
Food and energy are more expensive, but dynamics is falling
Prices of food and non-alcoholic beverages increased annually by 5.3 percent, while energy increased by 13 percent. Nevertheless, the pace of price increases is clearly slowing down.
– Inflationary force is weakening, and incoming data confirm a change in the macroeconomic environment. The wage dynamics has fallen markedly, oil prices on global markets are falling, and the weaker dollar reduces import costs. Consumers become more cautious, which reduces request pressure. All of this promotes the continuation of disinflation and creates a space for starting the loosening of monetary policy – comments Andrzej Gwiżdż, Port Investment Platform Analyst, cited by Business Insider Poland.
Why is inflation falling?
PKO BP analysts indicate that the main origin of disinflation was the decline in the dynamics of food prices – from 6.7% in March to 5.3% in April. The reason is "low base effect extinguishing 1 year ago (in April 2024 higher VAT on food returned)".
In addition, low-cost oil translated into a deeper drop in fuel prices - on an yearly basis it was as much as 8.3 percent.
Will RPP lower interest rates?
Experts foretell that falling inflation may prompt the Monetary Policy Council to reduce interest rates already at the May meeting.
"We estimation that base inflation in April decreased to around 3.4% y/y from 3.6% y/y in March, thus returning to the broadly understood inflation target. The wording of the publication, together with a pack of comparatively weak activity data in 1q25, fits into the ft simplification at the May MPC meeting, even by 50pb.” – reads an analysis published on the X portal.
Summary: What happens to inflation?
Forecasts indicate that inflation will proceed to decline in the coming months, although the pace of this process may slow down. The decisions of the RPP and the situation on the natural materials markets will be key.
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The CSO provided data on April inflation
