Core inflation in June
NBP data: In June, the CPI index decreased to 0.2% y/y, while inflation net of food and energy prices amounted to 0.9% y/y at the end of the month, a level similar to that seen in May.
The National Bank of Poland release on core inflation measures as at the end of June 2013, published on 16 July, shows a decline in all of its four measures on the corresponding period of the previous year. Thus, inflation:
- excluding administered (state-controlled) prices reached 0.1%, as against 0.4% in May and 0.7% in April;
- excluding the most volatile prices amounted to 1.4%, as against 1.5% in May and compared with 1.6% in April;
- net of food and energy prices amounted to 0.9%, as against 1.0% in May and 1.1% in April;
- the so-called trimmed mean (excluding the impact of 15% of the price basket characterised by the highest and lowest growth rates) was running at 0.8%, as against 1.1% in May and 1.2% in April.
The CPI (consumer inflation) index, announced by GUS the day before, stood at 0.2% y/y in June as compared with 0.5% in May and 0.8% in April.
The National Bank of Poland computes the four core inflation indices on a monthly basis in order to highlight the nature of inflation developments in Poland. The CPI only shows average price movement across the whole broad basket of consumer goods; by calculating core inflation indices we can address price changes in various segments of the basket. Thus, the sources of inflation can be identified more precisely, and future trends forecast more accurately. Furthermore, it can be determined to what degree the observed inflation trend is a lasting phenomenon, and to what extent it is driven by e.g. short-lived price hikes triggered by incidental factors.
The core inflation measure most frequently used by analysts is inflation excluding food and energy prices. It captures movements in prices 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. Also food prices are largely dependent on, among other things, the weather and conditions prevailing in the domestic and worldwide agricultural market.
See also: The NBP announcement on June 2013 core inflation »