Poland’s inflation edged into single digits in September, potentially giving the central bank scope to cut interest rates for a second consecutive meeting.
(Bloomberg) — Poland’s inflation edged into single digits in September, potentially giving the central bank scope to cut interest rates for a second consecutive meeting.
Consumer prices rose 8.2% from a year ago, compared with 10.1% in August, according to a preliminary report on Friday. The reading was below the 8.5% median estimate in a Bloomberg survey. Consumer prices dropped 0.4% on the month.
Rapidly slowing prices prompted the central bank to slash borrowing costs by three quarters of a percentage point earlier this month, a move that blindsided investors and weakened the zloty.
Governor Adam Glapinski sought to ally concerns that a reduction of a similar size was in store, saying last week the scope for future easing has narrowed considerably. State-controlled refiner Orlen SA has been helping to keep inflation in check by trying to hold down fuel prices before a parliamentary election on Oct. 15.
“The pressure on prices is gradually decreasing, and this month it was supported by strong drops in fuel prices,” said Grzegorz Maliszewski, chief economist at Bank Millennium SA in Warsaw. The prospects for further inflation slowdown “may be a pretext for another interest-rate cut in October.”
Goods continue to drive inflation lower, but price pressure remain persistent in services, according to Maliszewski. While the economy contracted in the previous quarter, wages are growing fast, unemployment is among the lowest in the European Union and the ruling party has promised to increase social spending after the election.
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