Polish CPI rose by 0.8%m/m in January, declining to 3.5% y/y from 3.6% in
December. The market expected rather stagnation or an increase to 3.7% y/y.
The decline was achieved despite the rather strong increase in food prices,
that accelerated to 2.1% y/y from 1.6% y/y in December due to a strong 1.0%
m/m rise. The prices of vegetables were the main source of the increase.
Clothing prices declined by 0.3% m/m , which is less than in January 2000.
As expected, housing costs increased significantly by 1.1% m/m, due to
regular hikes in controlled prices. In January, rent, water, savage and
energy prices went up. Transportation prices rose by 0.7% m/m, among others
due to public transport. Fuel prices have already started to rise; we must
expect further increase in February, given the depreciation of the zloty vs.
the dollar.
January inflation was for the most part accounted for by volatile food and
regulated prices. Other prices are strongly subdued. The y/y inflation
decreased despite accelerating food prices in y/y terms. There should be any
doubt that the weak Polish demand has pushed prices down and that there is
no reason to keep interest rates at current levels (provided that the MPC is
not more concerned by interest rates on household deposits than by the poor
health of the economy). Another signal in this direction should be the
Monday's January industrial output and January unemployment.
As for the next month, due to the low increase in February 2001 by 0.1%, we
must rather expect some acceleration of the y/y figure, as fuel and food
prices are going to rise faster more than last year.
Jakub Dvorak, CSOB