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Polish inflation hit a 21-year-high, exceeding most analysts' forecasts and boosting expectations that the central bank will keep raising interest rates.
Consumer prices in December jumped 8.6% from a year earlier, compared with 7.8% in November, preliminary data showed on Friday. The reading was above a median of 8.2% in a Bloomberg survey of 23 economists.
This week, Governor Adam Glapinski said he would favor at least one more 50 basis point rate hike, adding that the benchmark could “safely” reach 3% or even 4% when the tightening cycle ends. The central bank revised its inflation forecast to an average of 7.6% this year.
“Inflation will accelerate further in January on usual start-of-year increases in administrated prices, but later in the year the consumer price index may start slowing,” said Monika Kurtek, chief economist at Bank Pocztowy SA in Warsaw.
If that happens, interest rates may only need to rise to 3% this year but further tightening could be on the cards in 2023 as the government's temporary anti-inflation measures, mainly reductions in value-added tax on fuels, lapse.
- Food prices rose 8.6% y/y in December, energy costs 14.3% and fuel 32.9%
- The headline inflation number is the highest since Nov. 2000
- Prime Minister Mateusz Morawiecki announced on Friday plans for a second batch of anti-inflationary measures
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