The persistent depth of deflation in Poland, particularly when compared with the rest of Central Europe, appears to be due largely to measurement issues, rather than significantly weaker domestic price pressures. The “true” rate of inflation, while weak, is probably not as low as the national CPI data are telling us. Because of this, we think the central bank – which itself has started to question the data – may start to attach more weight to other figures when setting interest rates.
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