Economic Analysis

In today's Eyeopener:

- Today, we will see the full CPI inflation data for March
- The number of foreign nationals working in Poland rose by 7.1% y/y in October 2025
- EURPLN stable, slight declines in yields

The coming week will be relatively light in terms of economic data releases. Global markets’ attention will be focused on how negotiations on ending the war with Iran are progressing, but just after the weekend the number one topic will most likely be the outcome of the elections in Hungary. Opinion polls have for many weeks pointed to a growing lead of the opposition TISZA party, but the outcome is not a foregone conclusion, as the ruling Fidesz party can count on a number of electoral system regulations working in its favour and possibly also on a late-stage mobilisation of its electorate.

In Poland, balance of payments data for February will be released on Monday, followed on Wednesday by final March CPI inflation data. On Thursday, core inflation figures will be published along with the annual revision of quarterly GDP data for the past two years. (...)

GUS confirmed March CPI inflation at 3.0% y/y and 1.1% m/m, with goods accelerating to 2.2% y/y from 1.0% y/y and services to 5.0% y/y from 4.8% y/y. Estimates of food and fuel prices did not change vs the flash reading, at 0.0% m/m, and 15.4% m/m, respectively, while energy moved a tick higher, to 0.0% m/m from -0.1% m/m. Other categories were roughly in line with our estimates.

We are expecting the CPI inflation to oscillate around 3.0% y/y in the months to come (provided that cut in fuel taxes will remain in force until the year-end), with future development of oil prices remaining the main risk factor. We estimate March core inflation at 2.7% y/y and in our view it is likely to climb above 3.0% y/y further in the year. Such a development of inflation will make the MPC refrain from any rate changes until end of the year, in our view. 
 

In mid‑March we published a report outlining three scenarios for the development of the economic outlook, depending on how prolonged and severe the commodity shock triggered by the war in Iran would prove to be. Three weeks later, we can conclude that the first scenario, which we had then considered the most likely, turned out to be overly optimistic, and the baseline scenario is shifting towards scenario number two: the conflict does not escalate further, but prolonged uncertainty and the damage already inflicted on infrastructure mean that commodity prices may remain at least 15–20% above their February levels for most of this year. Recent reports about an agreement on a two‑week ceasefire are interpreted by us as a clear signal that neither the US nor Iran is interested in further escalation or a prolongation of the war. (…)