Rapidly decreasing food prices account for drop in August inflation rate

The Central Statistical Office (GUS) said on Friday that August consumer prices eased by 0.3% from July. The year-on-year inflation rate is now at 10.7%. Analysts did not expect that prices would drop so rapidly. If the consumer price index (CPI) is to decline in the second half of the year, it can lead to cuts in the country's high interest rates, which are currently between 9-23%. The main reasons for the fall in the August CPI was a 1.1% month-on month decrease in food prices and 0.6% drop in goods prices. The Finance Minister Jaroslaw Bauc is very optimistic. He forecasts that year-on-year inflation in September will be 10% allowing the possibility of reaching single-digit inflation by the end of the year. (Prawo i Gospodarka, Sept. 16-17, page 1, Reuters)