Polish October Inflation Rate Drops to Lowest in Four Months

Polish inflation slowed to a four-month low in October, threatening the central bank’s pledge to keep interest rates unchanged until at least mid-2014.

Consumer prices rose 0.8 percent from a year earlier, less than last month’s 1 percent advance, the Warsaw-based statistics office said today. The median estimate in a Bloomberg survey of 37 economists was for a 1 percent increase. Prices rose 0.2 percent from September.

Polish policy makers left rates at a record low last week, saying inflation will continue to undershoot their 2.5 percent target through 2015. Amid heightened concern about the possibility of deflation, the European Central Bank cut its benchmark to 0.25 percent Nov. 7 as Czech policy makers began the first koruna sales in 11 years to stoke price growth.

Slower inflation “may intensify expectations that the monetary-policy council could follow the ECB and consider further policy easing,” Piotr Bujak, chief economist for Poland at Nordea Bank AB, said by phone before the data were released. Even so, this “possible impact has already been offset by stronger-than-expected Polish economic figures.”

Gross domestic product rose 1.9 percent from a year earlier in the third quarter, beating the median estimate of 36 economists for a 1.6 percent expansion, the Warsaw-based Central Statistics Office said today.

The zloty gained 0.2 percent to 4.1883 per euro at 2:04 p.m. in Warsaw, weakened from 4.1866 before the data was released. The yield on two-year notes fell four basis points after the price data were published to 2.81 percent.

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