Core inflation in May
NBP data: While the May CPI index decreased to 0.5% y/y, inflation net of food and energy prices was running at 1% y/y at the end of May, representing a 0.1 p.p. decrease on the April figure.
The National Bank of Poland release on core inflation levels as at the end of May 2013, posted on 14 June, shows a decline in all of the four measures of underlying inflation. Thus:
- inflation excluding administered (state-controlled) prices reached 0.4%, as against 0.7% in both April and March;
- inflation excluding the most volatile prices amounted to 1.5%, as against 1.6% in April and 1.5% in March;
- inflation net of food and energy prices stood at 1.0%, as against 1.1% in April and 1.0% in March;
- the so-called trimmed mean (excluding the impact of 15% of the price basket characterised by the highest and lowest growth rates) amounted to 1.1% (as against 1.2% in April and 1.3% in March.
The CPI (consumer inflation) index, previously announced by GUS, amounted to 0.5% y/y in April as compared with 0.8% in April and 1.0% in March.
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 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 e.g. short-lived price hikes triggered by incidental factors. The core inflation measure most frequently used by analysts is inflation net of 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 global agricultural market.
See also: The NBP announcement on May 2013 core inflation »