CPI above forecast

Statistical office data released last week showed consumer inflation rose to 0.7 percent year-on-year in April, above the 0.6 percent forecast by analysts and up from an almost three-year low of 0.4 percent in March. However, it remains well below the central bank's target of 2.5 percent.

"This data only increases the conviction that interest rates will not change until the end of this year," said Piotr Bielski, an economist with Bank Zachodni WBK in Warsaw.

However, according to analysts, despite the rise, inflation was unlikely to go above one percent for most of this year. They put the rise down chiefly to supply-side factors over which the central bank has little control. "The increase in inflation is a result of growing food, fuel and gas prices," said Grzegorz Maleszewski, economist with Bank Millennium in Warsaw. "Demand pressure remains benign and does not create any bigger [immediate] risks for inflation. In the longer term however, there are some risks for inflation due to the improving labor market and economic acceleration."

Food prices rose 0.7 percent compared to March, while transport costs rose 1.8 percent year-on-year. Housing costs, including energy and utilities, grew at 4.3 percent on last year. (Reuters)