Bloomberg News

Polish Inflation Slowed to 3.9% in March on Food, Fuel

April 13, 2012

Polish inflation slowed in March as the cost of food and fuel fell, easing pressure on the central bank to raise interest rates.

The annual inflation rate fell to 3.9 percent from 4.3 percent in February, the Central Statistical Office in Warsaw said today. The figure matches the median estimate of 30 economists in a Bloomberg News survey. Prices rose 0.5 percent from the previous month. Poland’s central bank has an inflation target of 2.5 percent.

“The figures improve chances that inflation will return to target,” Elzbieta Chojna-Duch of the central bank’s Monetary Policy said in an interview on TVN CNBC after the data were released. March price growth, while in line with market forecasts, was “slightly better” than the central bank expected, she said. March output and retail sales data, due next week, will weigh on the next rate decision, Chojna-Duch said.

Last week, the Narodowy Bank Polski left its benchmark interest rate at 4.5 percent for a 10th month, saying the rate will be raised unless “considerable” economic weakening appears and the inflation outlook improves. While Governor Marek Belka said the economy probably expanded about 4 percent in the first quarter, price growth has exceeded the 3.5 percent upper limit of the bank’s tolerance range since January 2011.

Zloty Weakens

The zloty weakened after the data before recovering to trade at 4.1807 per euro at 2:43 p.m. in Warsaw, down 0.4 percent on the day. The yield on the five-year bond maturing in October 2016 rose to 5.017 percent from 5.013 percent late yesterday.

Policy makers may consider raising borrowing costs as early as May, Belka said at a press conference on April 4 after the last rate meeting. The governor also said he “wouldn’t read too much into monthly inflation numbers, but would rather look at what’s happening in the wider economy.”

“This isn’t a major slowdown and it’s mainly due to high- year earlier inflation,” Monika Kurtek, chief economist at Bank Pocztowy SA in Warsaw, said by phone. “A rate increase in May is very probable, unless we get weak industrial output and retail sales figures for March next week.”

Costs for food and drink eased to 4 percent last month from 4.6 percent in February, the report showed. Fuel prices slowed to 14.9 percent from 17.2 percent in the previous month.

The central bank’s Monetary Policy Council is scheduled to hold its next rate meeting on May 8-9.

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

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

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