Wage boom in April could lead to interest rate hike

April's wage increases this year grew by 12.6% as compared to the same month a year earlier. If this dynamic is maintained to the end of the year, the average wage could exceed zł.3,500 in December.

At the moment of Poland's accession to the EU this figure stood at zł.2,300. The wage increase in April exceeded the most optimistic analysts' expectations, who were hoping to see a rise of 11.5%.

The rapid increase in wages and in employment, which grew by 5.6% yoy in April, could have two consequences. "It suggests the maintaining of high consumption demand in the beginning of the second quarter," said Adam Antoniak, an economist with BPH.

However, on the other hand "We are expecting a double digit growth in wages, which goes with a simultaneous fall in efficiency and can lead to a fall in the competitiveness of Polish enterprises," added Jakub Borowski, chief economist in Invest Bank.

The threat of increased wages leading to growing prices is likely to lead to an increase in interest rates by the Monetary Policy Council in June. (Rzeczpospolita, p. B3; Dziennik, The Wall Street Journal Polska, p. 1) A.K.