Analysts confident of lower inflation following July fall in food prices

Food prices in the second half of July dropped by 1.1% compared to the first half of the month, and were 1.5% down from the second half of June, according to preliminary data released yesterday by the Central Statistical Office (GUS). Market analysts were not surprised by the price falls, and their inflation predictions remain largely unchanged. According to Marcin Mroz, an economist at investment bank Societe Generale, the figures show that the deflationary tendency will be maintained in July and August. He estimates the annual inflation rate in July at 5% to 5.3%, well down from the 6.2% in June. Tadeusz Chroscicki from the Government Center for Strategic Studies (RCSS) estimates the July inflation rate at 5%, which would be its lowest level for 24 years. According to Amerbank analyst Przemyslaw Magda, the recent flooding will not affect food prices, as the abundant grain crop is expected to compensate for the potential losses. (Gazeta Wyborcza, p. 18) K.K.