Core inflation in March 2020
NBP data: In March 2020, inflation net of food and energy prices stood at 3.6%. The CPI index stood at 4.6% (y/y) in the analysed period.
On 16 April 2020, Narodowy Bank Polski posted data on core inflation indices in March 2020. In year-on-year terms, inflation in March 2020:
- excluding administered (state-controlled) prices stood at 3.8%, compared to 4.0% in the previous month;
- excluding the most volatile prices amounted to 3.5%, compared to 3.4% in the previous month;
- inflation net of food and energy prices amounted to 3.6%, the same as the month before;
- the so-called 15% trimmed mean (excluding the impact of 15% of the price basket characterised by the highest and lowest growth rates) was running at 3.4%, compared to 3.5% the month before.
In March 2020, CPI inflation decreased to 4.6% y/y (from 4.7% y/y in February). The decrease in CPI was due to the sharp fall in the price of fuel for private means of transport (by 4.6% m/m; a fall in annual price growth from 2.4% in February 2020 to -2.9% in March 2020 as a result of the global fall in demand). On the other hand, growth in prices of food and non-alcoholic beverages increased (to 8.0% y/y against 7.5% y/y in February; mainly due to an increase in meat prices). Service price growth increased slightly in March 2020, to 6.5% y/y (compared to 6.4% y/y in February) as a result of a rise in waste disposal charges as well as an increase in prices of passenger air services, of communication services, and insurance. In contrast, price growth of foreign tourism services fell quite sharply (it is worth noting that, according to the GUS press release, the share of estimated data in the case of this group is significant and exceeded 50% in March). Price growth of non-food products (including alcoholic beverages and tobacco products) remained unchanged in March 2020 and stood at 1.2% y/y.
Narodowy Bank Polski 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, 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, for example, short-lived price changes triggered by incidental factors.
The core inflation measure most frequently used by analysts is inflation excluding food and energy prices. It captures trends in prices of those prices of 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. Also food prices are largely dependent on, among other things, the weather and conditions prevailing in the domestic and worldwide agricultural market.
See also: Core inflation data »