Inflation eases apart from Poland and Czechia

On the radar

• Serbia’s central bank left the key policy rate unchanged at 5.75%
• Poland’s 2Q26 GDP accelerated to 3.8% y/y. Inflation in July increased to 3.0% y/y.
• Inflation in Slovakia eased to 3.3% y/y in July.
• In Romania, industry contracted by -5.2% y/y in June.
• In Croatia, producer prices eased to 4.7% y/y in July.
• Today, Romania, Slovakia and Slovenia will release 2Q26 GDP and we will follow with Growth Navigator early next week.
• Poland will show core inflation, while Romania year-to-date current account

Economic developments

Today, we summarize inflation developments in the region in July, before we shift our focus to 2Q26 GDP data. Apart from Czechia and Poland, inflation have declined further in July. The war in Iran triggered a clear but largely temporary inflation spike across the region (in April or May depending on the country), primarily through higher oil, gas and electricity prices. The impact was visible across most CEE economies, although its magnitude differed considerably, reflecting countries’ energy exposure but also country’s response and price interventions. The government's decision to end measures that had been mitigating retail fuel price increases where behind the acceleration of inflation in Poland to 3% y/y in July from June’s 2.5% y/y (13.9% m/m increase in fuel prices) Food prices continued to decline marking the third consecutive monthly drop, but the decrease was not sufficient to offset the impact of higher fuel prices. Further, fuel prices will be behind further expected increase in inflation in coming months. The other countries worth mentioning are Hungary (inflation at 1.2% y/y sets the path for further monetary easing) and Romania, where inflation eased to 8.2% y/y. In Romania, we expect to see dynamic disinflation in the second half of the year with headline inflation falling toward 5.9% at the end of the year.

Market movements

Romanian central bank will consider lowering interest rates after the inflation rate drops below the benchmark rate, according to Governor Isarescu. As already mentioned, we expect to see such development toward the end of the year. At the turnout of 2026 and 2027 we thus believe the discussion to begin, and monetary easing should follow shortly. Serbia’s central bank kept the policy rate unchanged at 5.75% citing below-expected inflation, though it flags risks from oil prices and geopolitics. Further, central bank expects lower 2026 inflation than in its May projection that may affect interest rate outlook. Romania shut down its sole nuclear plant while Hungary is trying to salvage the operation of its own facility as a persistent drought curbs Danube river flows and hampers the cooling of reactors. Apart from Czechia and Poland where yields have increased this week, in other countries 10Y yields are overall lower. On the FX market, the Polish zloty has weakened this week.

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