In line with our expectations, compared with March this year, the July NBP macroeconomic projection revised the inflation path for 2026-27 upwards and the economic growth path for 2026-27 downwards. The March, low inflation NBP projection assumed oil market conditions from before the war, which is why the July projection is higher than the previous one.
The NBP sees inflation in 2027 higher than our forecasts. This is probably related to the cut-off date for the projection, 17 June, the day the preliminary US-Iran agreement was signed. A week before that date, oil was above US$90/bbl, and two weeks before it was above US$100/bbl. Therefore, oil price assumptions underlying our and the central bank forecasts may differ.
The projection points to a possible undershoot of the inflation target in 2028, with inflation averaging 2.4% year-on-year, but the March projection showed a similar picture, at an average of 2.3% YoY.
According to the NBP, annual average CPI inflation will reach 2.9% in 2026, compared with 2.3% in March, then 2.8% in 2027, previously 2.4%, and 2.4% in 2028, previously 2.3%. GDP growth is expected to be 3.7% in 2026, versus 3.9% in the March projection, 2.8% in 2027, previously 2.9%, and 3.0% in 2028, previously 2.9%.
However, the March projection painted an optimistic picture of inflation as it did not take into account the US-Iran war and its impact on oil prices. In the current projection, the CPI inflation forecast for 2027 appears too high, which may reflect a greater pass-through of higher energy prices into other prices or a more conservative oil price assumption.