Inflation in Poland highest in four years

Food

Inflation in Poland in June amounted to 4.6%, exceeding forecasts by the Ministry of Finance.

The last time a similar jump in prices occurred in Poland was in 2004 when the country joined the European Union. Then, however, the prices increased because of a change in tax regulations. Now the inflation rate is being accelerated by global increases in food and oil prices and economists are concerned with the drought in many parts of the country and the possibility of poor harvests. Economists expect August will see a peak in the inflation rate, when it will exceed 5%. According to some economists, it could rise to 5.4%.

The Gazeta Wyborcza daily writes that inflation is also being caused by Poles themselves. Having more money in their wallets after a period of wage inflation, they agree to pay more for goods and services, and suppliers take advantage of the good economic situation. In June an average salary in the private sector in Poland increased by 12% more than a year ago.

The Monetary Policy Council has increased interest rates 8 eight times since the beginning of 2007. According to analysts and investors the MPC will increase rates again in the autumn and in order to subdue inflation one rise probably won’t be enough. (Polskie Radio)

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