Polish November Inflation Accelerates for Third Month on Zloty
Polish inflation quickened to a six- month high in November on a weaker zloty, leaving little room for policy makers to ease borrowing costs even as the economy slows because of the euro region’s debt crisis.
Consumer prices rose 4.8 percent from a year earlier after a 4.3 percent increase in October, the Warsaw-based Central Statistical Office said today. The median estimate of 30 economists in a Bloomberg survey was 4.5 percent. Prices rose 0.7 percent from the previous month.
Inflation has remained above the central bank’s 2.5 percent target since September last year even after the bank raised the benchmark seven-day rate by a combined 1 percentage point in the first half of 2011. The Monetary Policy Council left the rate unchanged last week for a sixth month, saying a weak zloty is the biggest inflation risk.
“The effect of a weaker zloty is becoming more and more visible across entire categories in the consumer-price basket,” Ernest Pytlarczyk, chief economist at BRE Bank, wrote in a note before the release.
The zloty tumbled 13 percent against the euro in the past six months, the biggest drop among currencies tracked by Bloomberg. Poland sells 54 percent of its exports to the euro area and western banks own 59 percent of its bank assets.
Economic slowdown in the euro region and a weaker zloty offset each other as far as the impact on inflation goes, keeping “the chances for rate moves either way” unchanged since the meeting last month, central bank Governor Marek Belka said Dec. 7.
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