Bloomberg News

Polish Inflation Accelerates to Exceed Target for 13th Month

November 15, 2011

(Updates with zloty in sixth paragraph, central banker comment in eighth.)

Nov. 15 (Bloomberg) -- Polish consumer-price growth accelerated in October, exceeding the central bank’s target for a 13th month and stoking concern the zloty’s drop may keep inflation from slowing longer than predicted.

Prices rose 4.3 percent from a year earlier after a 3.9 percent increase in September, the Warsaw-based Central Statistical Office said today. The median estimate of 25 economists in a Bloomberg survey was 4 percent. Prices rose 0.7 percent from the previous month.

The Narodowy Bank Polski left its benchmark seven-day rate at 4.5 percent for a fifth month on Nov. 9. Policy makers raised borrowing costs four times between January and June by a total of 1 percentage point to combat inflation, which in May reached a decade-high 5 percent.

“Inflation is really high because of the zloty exchange rate, which you can see in energy and fuel prices,” Ernest Pytlarczyk, head of financial-markets research at BRE Bank in Warsaw, said in an e-mail. “You can rule out any rate cuts this year. The central bank’s window to ease will probably come in the first quarter of 2012.”

Six-month forward-rate agreements, which investors use to bet on changes in borrowing costs, extended gains to 5 basis points on the day to 4.76 percent, narrowing the gap with the three-month Warsaw Interbank Offered Rate to less than 15 basis points from 24 basis points yesterday.

Bonds dropped, pushing the yield on five-year notes five basis points higher to 5.12 percent. The zloty traded at 4.409 per euro at 3 p.m. in Warsaw, little changed on the data and from late yesterday.

It has slumped 2.3 percent this month, the fourth-worst performance among more than 170 currencies tracked by Bloomberg after the Hungarian forint, the Czech koruna and the Serbian dinar.

The October inflation data were “a surprise and are not favorable for the economy,” Elzbieta Chojna-Duch, a member of the central bank’s Monetary Policy Council, said on TVN CNBC today. Inflation may still slow in the coming months and come close to the central bank’s 2.5 percent target in April or May of next year, she said.

The central bank cut its 2012 growth forecast to 3.1 percent from 3.2 percent and raised its inflation forecast to 3.1 percent from 2.7 percent as a weaker zloty boosts import prices. It had said previously inflation would decelerate toward its 2.5 percent target next year.

--Editors: Balazs Penz, Alan Crosby

To contact the reporter on this story: Dorota Bartyzel in Warsaw at

To contact the editor responsible for this story: Balazs Penz at

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