Inflation continues to stay well below NBP target rates

This positive phenomenon is caused by a number of factors, such as the growth of employment, wages and consumption which is boosting economic growth to above 5% GDP. At the same time, consumer inflation has long remained below 1%. Producers' prices increase rate is also low, which can be explained by attempts to maintain competitive prices by the market and to increase profits by production and sales growth. Competition and globalization add to the phenomenon. So does a strong zloty, which help make imports cheap. Profitability of labor in Poland has been constantly growing faster than wages which also helps maintain low inflation. There are very few threats to the current trend, although we should not underestimate the influence of oil or food prices on the international market as well as fuel excise increase in 2007. Despite prices being under control at the moment, analysts expect interest rates to be raised rather than lowered. (Puls Biznesu, p.10) J.L