Pay rates set to continue rising

Data revealed by the Central Statistical Office last Thursday showed an 8.4-percent year-on-year rise of the average wage in Poland's corporate sector in April. This number is slightly lower than the 8.6-percent rise analysts had predicted for the month. It is expected that the April wage-growth data will significantly impact the Monetary Policy Council's (RPP) decision on interest rates at the end of May.

"It seems that the labor market took a breath in April after rapid acceleration in March. In the longer run, we expect the wage growth rate to surpass the labor productivity rate in industry, which will be alarming from the RPP's viewpoint," Michał Chyczewski, a BPH Bank economist says.

According to Chyczewski, the released figures should reinforce the RPP's view to stay in a "wait-and-see" mode this month and it will probably hike interest rates by 25 basis points as early as in July instead of October, as had been earlier expected. Another possible contributor to the rise would be higher inflation expectations, especially in regard to fruit prices pushed up by early May's unseasonal frost.

Analysts agree that the increase of the average wage is a long-term trend. "This increase is pretty much in line with forecasts, and it is likely that the coming months will bring similar, even stronger, increases in wages," Piotr Bielecki, an economist at BZ BWK Warsaw says. (Reuters)