Official annual inflation forecast at 2.1%, with similar level expected for 2003

The Finance Ministry declared on Monday that it has revised its forecast for annual inflation down to 2.1%. Official data shows that inflation over the last 12 months fell to 1.3%. According to analysts the fall in inflation was caused by a decline of prices in retail goods and services by 0.5%. This will cut the government's 2003 spending level - particularly on index-linked pensions and disability benefits - but it will also reduce tax revenues. According to analysts the revised inflation figure will have a minimal effect on the budget deficit. According to Jacek Wisniewski, an analyst with Bank Pekao in Warsaw, "The new forecast will force down both spending and revenues, but as they will balance each other out and will have little effect on the budget deficit". Currently inflation is lower than in the euro zone. It is possible that the Ministry of Finance could revise next year's inflation forecast from 3% down to below 2.5%. (Reuters; Rzeczpospolita, p. B1) P.W.