Poland's inflation rate dropped to 3.1% year-on-year in May, missing expectations and potentially allowing the National Bank of Poland to postpone interest rate hikes.
The figure came in below both consensus forecasts and analyst predictions of 3.6%, and marked a decline from April's 3.2% reading. The unexpected fall suggests underlying price pressures in the Polish economy are weaker than previously thought.
Energy costs continued to rise, with motor fuel inflation reaching 12.4% year-on-year, up from 8.4% in April. Household fuel inflation also increased to 5.0% from 4.6% in the same period.
These increases were offset by a sharp slowdown in food inflation, which declined to 0.5% year-on-year from 1.9% in April. Core inflation remained stable at around 3%, according to estimates.
The central bank's Monetary Policy Committee is scheduled to meet in July, when new inflation forecasts will be released. The June flash inflation reading will be available before that meeting.
Prior to the May data, expectations had been building that the National Bank of Poland would start a rate hiking cycle, possibly in July. The softer inflation print, combined with a potential deal to end the Iran conflict, may give policymakers grounds to keep rates unchanged.
