Low increase in food prices points to low inflation

Food prices rose by 0.5% month-on-month in the second half of April, leading analysts to estimate that inflation sank to a new low of 3% to 3.2% last month. Jacek Krzyslak, chief economist at the Finance Ministry, said that year-on-year inflation will likely be 3.1% in April and will further decrease to below 3% in May. Analysts at investment bank Morgan Stanley believe that low inflation is here to stay. The bank's economist Oliver Weeks says that, due to weak internal demand caused by high unemployment and the unused production capacity of Polish companies, even the expected economic recovery will not push inflation higher. (Puls Biznesu, p. 11; Rzeczpospolita, p. B2) T.J.