National Bank of Poland : Money supply in September 2020

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Core inflation in September 2020

Date: 16-10-2020

NBP data: In September 2020, inflation net of food and energy prices amounted to 4.3%. In the period under analysis, the Consumer Price Index (CPI) stood at 3.2% (y/y).

On 16 October 2020, Narodowy Bank Polski published data on core inflation indices in September 2020. In year-on-year terms, inflation:

• net of administered (state-controlled) prices, amounted to 2.3%, compared to 2.0% a month earlier;
• net of the most volatile prices, amounted to 3.2%, compared to 3.4% a month earlier;
• net of food and energy prices, amounted to 4.3%, compared to 4.0% a month earlier;
• the so-called 15% trimmed mean, excluding the impact of 15% of the price basket characterised by the lowest and highest growth rates, amounted to 3.2%, the same as the month before.

In September 2020, CPI inflation increased to 3.2% y/y (by 0.3 percentage points from August 2020). The increase in the CPI was driven by stronger growth in the prices of energy (by 1.2 percentage points, to -0.3% y/y), mainly as a result of a rise in the prices of fuel for private means of transport (the effect of higher oil prices), and stronger growth in the prices of services (by 0.6 percentage points, to 7.2% y/y), mainly as a result of a rise in the prices of services related to telecommunications, recreation and culture, and transport services. Weaker growth in the prices of food and non-alcoholic beverages (by 0.2 percentage points, to 2.8% y/y) driven by weaker annual growth in the prices of fruit (due to an increase in supply in the current economic season) and, to a lesser extent, by weaker annual growth in the prices of meat (driven by the ASF epidemic) had the opposite effect.

Narodowy Bank Polski computes the four core inflation indices on a monthly basis to highlight the nature of inflation developments in Poland. The CPI shows average price movements across the whole broad basket of consumer goods. When calculating core inflation indices, price changes in various segments of the basket are analysed. This helps to better identify the sources of inflation and forecast future trends more accurately. This also helps to find to what degree inflation is permanent and to what extent it is determined, for example, by price changes of a short duration triggered by incidental factors.

The core inflation measure most frequently used by analysts in inflation targeting is inflation net of food and energy prices. It captures trends in the prices of those goods and services which are fairly responsive to the central bank's monetary policy. On the other hand, energy prices (including fuel prices) are not set domestically but determined in the global markets, sometimes as a result of speculation. Food prices are largely dependent on, among other things, the weather and conditions prevailing in the domestic and global agricultural market.

See also: Core inflation data »