Poland Inflation May 2008

Poland's inflation rate rose in May to the highest since the end of 2004, increasing the possibility that the central bank will raise interest rates again as early as this month. The annual rate rose to 4.4 percent from 4 percent in April. Consumer prices rose a monthly 0.8 percent, compared with a gain of 0.4 percent a month earlier.

Poland's inflation rate has now been higher than the central bank's target for six consecutive months, a situation which has lead to seven increases in the key interest rate since April last year. The zloty rose to 3.3865 against the euro after the report before closing lower at 3.3900 in Warsaw. The prospect of rising interest rates is obviously liable to lead to zloty strengthening.