Oil and food to fuel CPI projection
Based on the data available on July 20, the CPI would continue to rise during the next three quarters on the back of the high oil and food prices and Poland's progressing economic recovery.
The NBP estimates in the projection that a 9 percent year-on-year increase in food prices will keep inflation considerably high until Q1 2005. Oil prices are expected to exert upward pressure on inflation by the end of 2004, and next year they are expected to contribute to eased CPI.
According to the projection, it is likely that inflation will rise above the target level of 2.5 percent in 2005-2006.
July saw inflation at 4.6 percent year-on-year. The NBP deputy head and report supervisor Krzysztof Rybinski said that inflation might ease to 2.5 percent year-on-year only at the end of next year-but only if the Monetary Policy Council (RPP) limits price growth.
The prediction indicates that the GDP would rise 4.5-5.5 percent in 2005-2006, with net exports giving way to internal demand, particularly to investment demand, as the central bank's inflation projection actually takes into consideration July's interest rate hike by 25 bps across the board.
Finance Minister Mirosław Gronicki disagreed with the Central Bank on Tuesday. "I do not agree with this projection. I think it is based on very pessimistic assumptions as for crude oil prices, fuel prices and PPI. Therefore, I interpret it as a very pessimistic warning forecast," Gronicki told a press conference.
Economists, according to a poll by news agency ISB, agreed that the projection seemed overly pessimistic. They expect an update in the next quarterly report on inflation. (ISB M.W.)
The NBP estimates in the projection that a 9 percent year-on-year increase in food prices will keep inflation considerably high until Q1 2005. Oil prices are expected to exert upward pressure on inflation by the end of 2004, and next year they are expected to contribute to eased CPI.
According to the projection, it is likely that inflation will rise above the target level of 2.5 percent in 2005-2006.
July saw inflation at 4.6 percent year-on-year. The NBP deputy head and report supervisor Krzysztof Rybinski said that inflation might ease to 2.5 percent year-on-year only at the end of next year-but only if the Monetary Policy Council (RPP) limits price growth.
The prediction indicates that the GDP would rise 4.5-5.5 percent in 2005-2006, with net exports giving way to internal demand, particularly to investment demand, as the central bank's inflation projection actually takes into consideration July's interest rate hike by 25 bps across the board.
Finance Minister Mirosław Gronicki disagreed with the Central Bank on Tuesday. "I do not agree with this projection. I think it is based on very pessimistic assumptions as for crude oil prices, fuel prices and PPI. Therefore, I interpret it as a very pessimistic warning forecast," Gronicki told a press conference.
Economists, according to a poll by news agency ISB, agreed that the projection seemed overly pessimistic. They expect an update in the next quarterly report on inflation. (ISB M.W.)
