Surprisingly terrible harvest sows seeds of double-digit inflation this year

Grain harvests could be as much as 18.3% lower than last year's, which would have a disastrous effect on the inflation rate, warns the Central Statistical Office (GUS). "It will take a miracle for the 2000 [year-on-year] inflation rate to stay in single-digits," said GUS vice-president Janusz Witkowski. The government expected crops to be 10% lower than last year, as a result of the drought which lasted from mid-April almost until the end of June. But matters got worse, as the current rainy weather is making it difficult for farmers to harvest their fields. The Agriculture Ministry is considering applying to the government to introduce a duty-free contingent for grain imports. As a result of poor crops, food prices are rising much faster than expected, driving the inflation rate. There is no chance of curbing inflation to the target rate of 5.7%, featured in the budget. When preparing the 2001 budget, the Finance Ministry expected this year's inflation to be 9.1%. Now both GUS and the Gdansk Institute for Market Economics Research (IBnGR) are forecasting that number to be 10.2%. (Gazeta Wyborcza, page 1) T.J.