Poland Inflation Reaches 4.0% in September Driven by Fuel Prices

Key summary

Poland's consumer price index (CPI) rose to 4.0% year-on-year in September, matching expectations with fuel prices as the primary driver. Other food and energy prices also showed upward signs, increasing the risk of a widespread energy shock impact on the economy. Inflation is expected to accelerate further over the coming months, approaching 4.5% by year-end. Headline CPI increased nearly 2% due to fuel prices rising almost 10% month-on-month since February, following the Gulf conflict and fuel crisis, with station pump prices in Poland increasing more than 35%. Core inflation excluding fuel prices remained stable overall. Supply-side factors, including food and energy prices, will drive inflation next year, while domestic price pressure may slow down. Average annual inflation is expected to remain above the National Bank of Poland's target upper bound for a prolonged period, potentially leading to countermeasures. Inflation is not expected to return to a stable target framework before Q3 2027. The Thai Embassy in Warsaw notes that high inflation poses challenges to business costs and domestic purchasing power, with fuel and energy price hikes reducing importer profits and affecting shipping rates and international logistics costs. Rising food prices due to supply chain issues and fertilizer costs will reduce consumer purchasing power, shifting spending towards value or substitutes. The National Bank of Poland's assessment suggests keeping policy interest rates high, tightening financial costs for Polish businesses and delaying expansion or new orders. Thai exporters are advised to use risk management tools like export insurance, monitor counterparty financial status closely, and adjust strategies towards long-shelf-life processed food, raw materials, and durable industrial goods. The energy crisis also presents opportunities for energy-saving products like solar cell equipment, high-efficiency appliances, and temperature-control construction materials.