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Core inflation in November 2019

Date: 16-12-2019

NBP data: In November 2019, inflation net of food and energy prices amounted to 2.6%, while the Consumer Price Index (CPI) stood at 2.6% (y/y).

On 16 December 2019, Narodowy Bank Polski posted data on core inflation indices in November 2019. In year-on-year terms, inflation:

  • excluding administered (state-controlled) prices stood at 2.8%, compared to 2.6% the month before;
  • excluding the most volatile prices amounted to 2.6%, the same as the month before;
  • inflation net of food and energy prices amounted to 2.6%, compared to 2.4% 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) stood at 2.1%, compared to 2.0% the month before.

In November 2019, CPI inflation increased to 2.6% y/y (by 0.1 pp compared to October 2019). The rise in CPI inflation in November 2019 was driven by a further increase in the prices of services (to 5.1% y/y as compared to 4.6% y/y in October 2019; the base effect in the category of communication and a rise in the prices of package travel services) and an increase in the prices of food and non-alcoholic beverages (to 6.5% y/y compared to 6.1% in October 2019; primarily, a further rise in the prices of pork and processed meat driven by the ASF epidemic in China). A further decline in the prices of fuel for private means of transport (to -5.4% y/y as compared to -4.8% in October 2019; the statistical base effect) had the opposite effect.

Higher CPI inflation was accompanied by an increase in three of the core inflation measures and a stabilisation of one measure. Inflation excluding food and energy prices in November 2019 stood at 2.6% y/y (an increase of 0.2 pp. on the previous month’s figure).

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 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 changes triggered by incidental factors.

The core inflation measure most frequently used by analysts is inflation net of food and energy prices. It captures trends in 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. Food prices are largely dependent on, among other things, the weather and conditions prevailing in the domestic and global agricultural market

See also: Core inflation data »

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