Core inflation in August 2016
NBP data: In August, inflation net of food and energy prices stood at -0.4%. In the analysed period, the CPI index amounted to -0.8% (y/y).
On 13 September 2016, Narodowy Bank Polski posted data on core inflation indices in August 2016. In the wake of a slight increase in the CPI, three of the four core inflation measures published by NBP increased and one measure remained at the level of the previous month. In year-on-year terms, inflation:
- excluding administered (state-controlled) prices amounted to -0.8%, as against -0.9% the month before;
- excluding the most volatile prices amounted to 0.0%, as against -0.1% the month before;
- net of food and energy prices amounted to -0.4%, the same as the month before;
- the so-called 15-percent trimmed mean (excluding the impact of 15% of the price basket characterized by the lowest and the highest growth rates) stood at -0.2%, compared to -0.3% the previous month.
Since the beginning of 2016, all the published measures of core inflation have been hovering at a very low level, and in most cases – close to their historical lows (with the exception of inflation excluding administered prices).
The August CPI index, announced by GUS on 12 September 2016, amounted to -0.8% (y/y). The readings of the index were in line with the flash estimates posted by GUS on 31 August 2016.
Factors weakening deflation included, above all, an increase in the growth of the prices of fuel for private means of transport – by 0.9 percentage points to -10.2% y/y (as a result of the base effects associated with the stronger fall in oil prices in August 2015) and a further increase in price growth of food and non-alcoholic beverages – to 1.2% y/y in August 2015 (against 1.0% y/y in July 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 index shows the average price movement across the whole broad basket of consumer goods. By calculating the 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 forecasted 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, for example, by 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. Food prices are largely dependent, among other things, on the weather and conditions prevailing in the domestic and global agricultural markets.
See also: The August 2016 core inflation data »