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Core inflation in April 2020

Date: 18-05-2020

NBP data: In April 2020, inflation net of food and energy prices stood at 3.6%. The CPI index stood at 3.4% (y/y) in the analysed period.

On 18 May 2020, Narodowy Bank Polski posted data on core inflation indices in April 2020. In year-on-year terms, inflation in April 2020:

  • excluding administered (state-controlled) prices stood at 2.5%, compared to 3.8% in the previous month;
  • excluding the most volatile prices amounted to 3.4%, compared to 3.5% in the previous month;
  • inflation net of food and energy prices amounted to 3.6%, the same as 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) was running at 3.4%, the same as the month before.

In April 2020, CPI inflation decreased to 3.4% y/y (from 4.6% y/y in March). The decrease in CPI was mainly due to the sharp fall in the price of fuel for private means of transport (by 12.9% m/m; a fall in annual price growth from -2.9% in March 2020 to -18.8% in April 2020). Growth in the prices of food and non-alcoholic beverages also decreased (to 7.4% y/y against 8.0% y/y in March, mainly due to a decrease in meat prices). A slight decline was also noted in the growth of non-food products (including alcoholic beverages and tobacco products) from 1.2% y/y recorded in March 2020 to 1.1% y/y in April. On the other hand, in April 2020 the annual growth rate of services remained unchanged on the previous month’s level at 6.5% y/y.

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 changes triggered by incidental factors.

The core inflation measure most frequently used by analysts is inflation excluding food and energy prices. It captures trends in the prices of those 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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