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Inflation to exceed 3.5 pct in coming months: Monetary Policy Council

On Wednesday, the Monetary Policy Council (RPP) kept all the interest rates of Poland’s national bank NBP unchanged. In the coming months, the inflation rate will likely remain above the upper limit for deviations from the inflation target (3.5 percent), while inflation is to decline next year.

According to the preliminary estimate of Statistics Poland, inflation in April 2021 amounted to 4.3 percent year on year. The inflation growth was mainly driven by the further increase in food and fuel prices. At the same time, the annual inflation rate has been elevated by the increase in electricity prices that occurred at the beginning of 2021 and higher fees for garbage disposals, which are factors independent of the national monetary policy.

“Higher inflation is also driven by rising costs of operating enterprises in a pandemic, including higher transport costs and temporary disruptions in global supply networks,” the RPP statement reads.

The aforementioned factors will most likely cause the annual inflation rate to remain above the upper limit for deviations from the inflation target in the coming months, which means that it will exceed 3.5 percent.

According to the RPP, inflation developments in 2022 will depend on the pace and durability of the economic recovery, including the future situation on the labour market after the end of aid packages.

In line with Wednesday’s RPP decision, the reference rate is still 0.1 percent on an annual basis.

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