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UPDATE 1-Polish CPI jumps in April to 4 pct, above fcasts

Published 05/14/2009, 09:11 AM
Updated 05/14/2009, 09:32 AM
TTEF
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* Analysts expected 3.8 percent price jump

* Food and oil prices fuelled April inflation

* Polish economy should bottom out in Q2/Q3, says cbanker

(Adds c.banker comment, detail)

WARSAW, May 14 (Reuters) - Polish consumer prices rose unexpectedly 4.0 percent year-on-year last month, touching the six-month high and increasing chances the central bank will leave interest rates unchanged in May.

Analysts in a Reuters poll had expected prices to have risen 3.8 percent year-on-year last month. In month-on-month terms, consumer prices in April rose 0.7 percent, also exceeding the expected 0.5 percent rise.

"Inflation is significantly higher than previously expected...But it is worth mentioning that there was an Easter holiday in April and it usually causes a jump in prices," said Piotr Kalisz, chief economist at Citibank Handlowy.

Such an unexpected price jump may cause the central bank's Monetary Policy Council (MPC) to pause in cutting rates for a second consecutive month, the analyst added.

"The MPC is likely to wait for the new inflation projection, due in June, to better evaluate the inflation outlook in the coming quarters," Kalisz said.

The MPC has already slashed borrowing costs by a total of 225 basis points, bringing the key rate to a record-low of 3.75 percent as the euro zone, Poland's main trade partner, battles a recession.

One of the MPC members said after the data was published the Polish economy should bottom out in the second and third quarters.

"In this period we should see the bottom and the fourth quarter should already bring a recovery," Marian Noga, who supported some of the MPC's recent rate cuts, told TVP Info.

Poland's economic growth is seen slowing significantly to 0.5 percent this year, down from 4.8 percent in 2008. However, the country is expected to fare better than its regional peers, most of whom are seen facing a contraction.

(Reporting by Marcin Goettig, writing by Dagmara Leszkowicz; Editing by Ron Askew)

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