Future inflation index declines in August third month in row - BIEC
August 14, 2014
Poland's future inflation index (WPI) decreased by 0.9 points in August, marking the third month of declines in a row and signaling a significant reduction of inflation pressure, the Bureau for Investments and Economic Cycles (BIEC) said in its monthly report.
"It was the third month of decline, with the scale of the fall increasing month by month," the BIEC report reads. "Out of nine index components, only one indicated growth of prices, while the remaining pointed to their decrease or stabilization. This means a significant reduction of inflation pressure in the economy."
An important factor at play are entrepreneurs' fears related to the economic effects of the Russian embargo on Polish exports, the authors said.
The strongest of the disinflationary components in August turned out to be entrepreneurs' expectations concerning room for price increases, the report showed. The number of companies expecting price hikes has fallen decisively in the past three months.
Entrepreneurs are also cutting production costs in order to salvage profits amidst falling prices, BIEC analysts said.
Among other deflationary factors, import prices came down mainly due to the weakening of the zloty, capacity utilization decreased slightly and households reduced the rate of borrowing vis-a-vis the prior year period for the third month in a row. M3 money supply changed little.
The only pro-inflationary factor this month have been prices of storage for companies.