Polish Central Bank Sees Temporary CPI Impact From Euro 2012

Poland’s hosting of the European 2012 soccer championship will spur a “limited and temporary” boost in inflation as shop owners, restaurants and hotels raise prices amid a flood of fans, the central bank said.

Prices in Poland are on average lower than in the European Union, which may be used as “an excuse for companies to take advantage of Euro 2012 and raise prices more than justified by costs,” the bank’s Economic Institute said in a report obtained by Bloomberg today. The effects of the tournament will be “limited and temporary” because accommodation services comprise only 0.3 percent of the consumer-price basket, it said.

While policy makers from Turkey to Brazil are reducing interest rates to support economic expansion, central bank Governor Marek Belka said on April 4 that borrowing costs may rise with inflation exceeding the bank’s target for 17 months.

Consumer prices grew 3.9 percent in March from a year earlier, compared with the 3.5 percent upper end of the central bank’s target range. The inflation rate in June and July may increase by less than 0.5 percentage point, the institute said.

“Even if we see a price increase in categories other than accommodation, the increase will be temporary and should not elevate inflationary expectations,” the institute said.

About 800,000 fans are expected to watch teams from 16 European countries compete in the tournament between June 8 and July 1, according to the Polish Sports Ministry. Poland is co- hosting the tournament with Ukraine.

Hosting the championships will help cut Poland’s unemployment rate toward the government’s 12.3 percent target at the end of the year, Labor Minister Wladyslaw Kosiniak-Kamysz said in an interview yesterday.

To contact the reporter on this story: Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net

To contact the editor responsible for this story: Alan Crosby at acrosby1@bloomberg.net

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