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By Anna Koper
WARSAW, Feb 14 (Reuters) – Inflation in Poland rose faster than expected in January, statistics office data showed on Friday, hitting its highest point since 2011 in a reading that is likely to intensify debate about interest rates in central Europe’s largest economy.
January CPI came in at 4.4% year-on-year, above the 4.2% forecast by analysts in a Reuters poll and well above the central bank’s target range of 2.5% plus or minus one percentage point.
“This trend will continue in the coming months, although the pace will slow down slightly,” said Grzegorz Maliszewski, chief economist at Bank Millennium. “But with this scenario we can see readings above 4.5% in the first quarter, so this inflationary pressure in the economy is intensifying.”
The data showed the strongest price increases in food and beverages, which rose 6.7%.
The inflation reading is likely to embolden hawkish members of the central bank’s Monetary Policy Council (MPC), but economists see little chance of them winning a majority for a rate hike.
Central bank governor Adam Glapinski this month reiterated his view that the cost of borrowing is likely to remain unchanged until his term ends in 2022.
The central bank expects inflation to rise above the higher end of its target range in the first half of 2020, before returning towards the 2.5% target later.
Glapinski has blamed external factors beyond the control of rate-setters for the uptick in inflation.
Gross domestic product growth for the fourth quarter of 2019 was a tad above expectations at 3.1% year-on-year, down from a 3.9% rise in the previous quarter, data showed on Friday.
Economists have pointed to a slowdown in private consumption as being behind the decrease in growth, suggesting further social transfers and tax cuts implemented by the government last year have failed to encourage spending.
By 0946 GMT the zloty had firmed 0.14% against the euro to 4.2391. Benchmark 10-year bond yields fell almost four basis points to 2.187%. (Reporting by Anna Koper and Anna Wlodarczak-Semczuk; Writing by Gdansk Newsroom and Alan Charlish; editing by Philippa Fletcher)