Poland Inflation


Inflation falls on lower food prices

In June, consumer prices fell 0.4% over the previous month, contrasting the 0.6% price rise observed in May. The drop mainly reflected lower prices for food (-1.3% month-on-month), caused by weaker demand for vegetables amid the panic surrounding the E.coli bacteria strain detected in Germany. This one-off exogenous shock helped to curb inflationary pressures, as the headline annual figure fell from a decade-high 5.0% in May to 4.2% in June. Nevertheless, inflation still exceeds the Central Bank's target of 2.5% with a tolerance margin of 1.0 percentage point. Core inflation, which excludes food and energy prices, edged up from 2.1% in April to 2.4% in May, the latest month for which data are available. In its latest Inflation Report from July, the Central Bank updated its forecasts and now estimates that inflation will end the year at 4.0% (previous forecast: 3.2%), before moderating to 2.7% in 2012 (previous forecast: 2.8%).


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