TOP MACRO THEME(S):
- Disinflation is holding on tight: CPI inflation in May fell to 13.0% y/y from 14.7% y/y in April and was the lowest since April 2022 and 5.4pp lower than its peak in February.
- Exports shine against all odds: GDP in 1q23 declined by 0.3% y/y after a rise of 2.3% y/y in 4q22. Breakdown of the growth showed a more profound fall in consumption, continued investment growth and a deeply negative inventory contribution offset by strong net exports.
WHAT ELSE CAUGHT OUR EYE:
- PMI unexpectedly rose to 47.0 from 46.6 in April due to decelerating fall in output and new orders. More importantly, May reading showed the largest ever easing of input and final goods price pressure which was supported by falling prices of commodities and PLN appreciation.
- In 2022 an average household saw an increase of disposable income per capita of 11.4% (to approx. 500 EUR) accompanied by increase in expenses of 15.2% (to approx. 270 EUR). In real terms a fall of income was more profound (-2.6%) than an increase in expenses (0.7%) resulting in implied saving rate falling to 34.4% from 36.6% in 2021.
THE WEEK AHEAD
- We expect that the Polish MPC will leave interest rates unchanged at its meeting on Tuesday, amid a monthly stabilisation of prices recorded in May and broad-based disinflationary signals. Expectations regarding interest rate cuts in 4q23 have been amplified by recent comments by the NBP Governor
and a few other MPC members.
NUMBER OF THE WEEK:
- 16.6% – increase in the minimum wage proposed by the government to come into effect in January 2024; as of now the minimum wage stands at 3490 PLN and will increase to 3600 PLN in July 2023.