Another month of record low inflation may not be enough for the RPP

Food prices in the first half of July were lower by 0.7% than in the second half of July. Compared to the last two weeks of June food prices decreased by 2.4%. The Finance Ministry and the majority of analysts estimate that inflation for July will not be higher than 1.4%, and will be lower compared to June's by 1.6%. "But in August food prices will not decrease that much, so I think that inflation will be higher but still below 2%. At the end of the year inflation should be about 2.3% said Maciej Reluga, an economist with Bank Zachodni WBK. In his opinion the level of inflation and food prices will encourage the Monetary Policy Council (RPP) to lower interest rate by 0.5%. Iwona Pugacewicz-Kowalska, an economist with CA IB Securities, thinks that the RPP will be more cautions and wait to hear the full details of Kolodko's plan, which more and more analysts are beginning to fear may have a negative influence on the economy. (Rzeczpospolita, p, B2; Parkiet, p. 6) A.L.