Inflation once again falls to record low, renewed calls to lower interest rates

According to the Central Statistical Office (GUS), year-on-year inflation has dropped to 1.9% in May, which is the lowest level in contemporary Polish history. Analysts were not unduly surprised, but they are worried about the future. In comparison to April, the prices of goods and services dropped by 0.2%. Food prices, which constitute 30% of inflationary pressure, dropped by 0.9% with respect to April, and 0.4% in comparison to the same period last year. Another important factor, fuel prices, dropped by 0.2% in comparison to April and by 3.1% in comparison to May 2001. However, energy prices and residential communal charges increased by 5.9% since May 2001. The cost of tobacco products and alcoholic beverages rose by 0.2% in comparison to April and by 3.9% as compared to a year ago. According to analysts, this rapid fall in inflation stems from weak domestic demand caused by the economic slowdown. This has lead some analysts to call on the Monetary Policy Council (RPP) to further decrease interest rates either in June or July. (Puls Biznesu, pp. 1, 15; Prawo i Gospodarka, pp. 1, 9, 28) M.M.