Polish inflation accelerated anew in January on energy and shelter costs, though probably not enough to sway policy makers expecting a sharp easing in price growth to lift interest rates.
(Bloomberg) — Polish inflation accelerated anew in January on energy and shelter costs, though probably not enough to sway policy makers expecting a sharp easing in price growth to lift interest rates.
Consumer prices rose 17.2% from a year earlier in January, compared with 16.6% in December, according to data released on Wednesday. The reading was just short of the median estimate of 17.6% in a Bloomberg survey of 29 economists. Prices rose 2.4% on the month.
Poland’s Monetary Policy Council left the key interest rate unchanged at 6.75% for a fifth consecutive month last week and Governor Adam Glapinski said he expects inflation to retreat to 6% by the end of the year. While he reiterated that it’s too early to discuss rate cuts, investors see the benchmark falling by about 1 percentage point in 12 months.
Glapinski’s forecast clashes with the outlook from the European Commission, which sees Poland battling the European Union’s second-highest rate of consumer-price growth of 11.7% this year.
“The uncertainty about Wednesday’s reading is significant,” said Grzegorz Maliszewski, economist at Bank Millennium wrote in a note. “Inflation is approaching its peak, which we believe will be reached in February.”
January inflation is the first reading to reflect a government freeze on households power prices following a spike in energy costs last year. At the same time, Poland brought back a 23% value added tax on fuels, electricity gas and heating, adding to uncertainty about how new rules may impact consumer prices.
–With assistance from Joel Rinneby and Konrad Krasuski.
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