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Core Inflation in June 2016

Date: 12-07-2016

NBP data: In June, inflation net of food and energy prices stood at -0.2%. In the analysed period, the CPI index amounted to -0.8% (y/y).

On 12 July 2016, Narodowy Bank Polski posted data on core inflation indices in June 2016. In year-on-year terms, inflation:

  • excluding administered (state-controlled) prices stood at -0.7%, as compared with -1.0% in the previous month;
  • excluding the most volatile prices amounted to -0.1%, compared to -0.2% in the previous month;
  • net of food and energy prices amounted to -0.2%, as against -0.4% the month before;
  • the so-called 15% trimmed mean (excluding the impact of 15% of the basket of prices characterised by the highest and lowest growth rates) was -0.3%, compared to -0.4% a month before.

In 2016, all the published measures of core inflation have been hovering at very low levels, in most cases close to their historic lows (except for inflation excluding administered prices). However, June 2016 is the second consecutive month of growth of most core inflation measures.

The June CPI index, announced by GUS on 11 July 2016, amounted to -0.8% (y/y). The readings of the index were in line with the flash estimates posted by GUS on 30 June 2016.

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 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. Food prices are largely dependent, among other things, on the meteorological conditions and conditions prevailing in the domestic and global agricultural markets.

See also: The June 2016 core inflation data »

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