Price Worries Grow
By Steven Muller
Core inflation rose to 3.4 percent in June, data from the National Bank of Poland showed on Tuesday, adding to concerns that price growth may remain high this and next year despite signs the economy is slowing on the back of weaker growth in western Europe.
Headline inflation, which measures the change in prices paid in shops and for goods and services elsewhere, also rose faster than most analysts expected, to 4.6 percent last month. Popular concerns over prices are tempered by continuing double-digit growth of wages – but the national bank’s interest rate setting committee says that it may yet need to raise rates further in the next couple of months to make sure price growth slows in the months ahead. High wage growth increases consumer demand, which in turn tends to allow retailers to raise prices more.