Inflation beats expectations
While inflation keeps climbing, February's figure marked the second consecutive time the result came in better than analysts expected. Inflation stood at 10.4% year-on-year for February, up from 10.1% in January. The relatively positive outcome many analysts had expected inflation for February to be 10.5% has many saying that inflation in Poland has peaked and is now on its way down.
Dariusz Filar, Bank Pekao's chief economist, said that models anticipate inflation to begin falling in March. "In some senses it's right to say that March could be a turning point, because March could begin the confirmation of a downward trend in inflation and an upward trend in exports," he said. March inflation should drop to 10.3%, Filar said, followed by 0.1 percentage-point decreases in each of the next three months. July, he said, should prove to be the first step back into single-digit territory at 9.8%.
James Owen, an economist with SG Bank, is also predicting sinking inflation for the near future, but said he's not so convinced March is the month. Nevertheless, he expects inflation within the 10.2-10.6% range for March-April. "Later it should start falling and start falling quickly," he said.
Owen, who always has one eye on oil prices when discussing inflation, said he's waiting to find out what kinds of decisions come out of the Organization of Petroleum Exporting Countries (OPEC) meeting later in the month. Rising fuel prices often have a large negative impact on inflation. "I think with OPEC there's a lot more uncertainty," he said. If a decision is reached to increase oil production, Owen said, inflation could definitely be on the way down.
Independent of what OPEC decides, however, crude oil prices have been falling and were at $27.53 per barrel after reaching more than $30 at the beginning of the month. Pekao's Filar said stabilizing oil and food prices should contribute to lower inflation. The growth in food prices slowed to 1.1% month-on-month in February from 1.4% in January.
The overall Consumer Price Index (CPI), though still rising, has slowed as well, Filar said. In the December to January months, inflation rose a considerable 1.8 percentage points compared to 0.9 percentage points from January to February. "We expect a continuation of this trend next month," he said.
February's 10.4% inflation figure is a sharp increase from a year ago. In February 1999, Poland saw year-on-year inflation of 5.6% a historic low. The Finance Ministry expected year-on-year inflation for February to come in at 10.1-10.3%.
