Narodowy Bank Polski

Core inflation in June 2011

Date: 20-07-2011

In June 2011 two core inflation measures remained at an unchanged level, whereas the other two decreased – as follows from the latest data of the NBP.

In June 2011 the commonly used inflation measure – the Consumer Price Index (CPI) dropped to 4.2%, following a rise of 5.0 % in May (from 4.5% in April). This change in the Consumer Price Index was followed by a decline in two core inflation measures, whereas the two remaining ones stabilized at an unchanged level.

The data on core inflation in June 2011, published by the National Bank of Poland on 20 July 2011 show that, as compared to June 2010, these indicators were as follows:

  • inflation excluding administered prices (controlled by government authorities) dropped to 4.0% from 4.8% registered a month before;
  • inflation excluding most volatile prices remained at its previous month’s level, namely 3.2%;
  • inflation net of food and energy prices amounted to 2.4% - similarly to the previous month;
  • the so-called trimmed average of 15% (eliminating the impact of 15% of prices showing the lowest and highest growth rate) amounted to 3.8% (as compared to 4.0% a month earlier).

The National Bank of Poland calculates these four core inflation measures to better identify the sources of price increases. The general Consumer Price Index (CPI) reflects the average movement in the price of the whole basket of mass consumption products. While calculating core inflation, price movement in various segments of this basket is analysed. This allows to better understand the sources of inflation and more precisely forecast future trends. This also allows to determine the extent of the impact on inflation of such factors as, for example, short-lived price shocks triggered by unexpected factors such as natural disasters causing sudden spikes in the prices of a particular commodity.

Analysts most often use core inflation net of food and energy prices. It reflects movements in prices that can be impacted by the central bank’s monetary policy. Prices of energy (including fuel) are determined not only by the domestic market – price impulses also originate from the global markets. Therefore, this index is considered to reflect inflation trends most accurately.

See also: Information of the NBP on core inflation in June 2011

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