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Higher base of comparison slows inflation in December


In our view, the slowing of inflation in December was primarily a statistical effect caused by a higher reference base from last year. Although a rising base of comparison will exert a moderating pressure on consumer price growth in the coming months, its effect is likely to be largely neutralised by the continued weakness of the zloty (though the Polish currency strengthened visibly in the closing part of January). And there will be other inflation-boosting factors as well, namely an increase in electricity tariffs and a rise in the excise duty on tobacco products and diesel oil from January 2012. Therefore the CPI is unlikely to get back within the NBP’s target range in the nearest months. According to our forecasts, a more pronounced fall in inflation will occur only towards the end of the second quarter. We predict that in 2012 as a whole the average annualised CPI will be 3.3%.

Paweł Sionko
Construction Market Analyst, PMR

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