Double-Digit Growth in Polish Wages Highlights Inflation Risks

Polish wages are growing at the fastest pace since 2008, raising concern over a spike in inflation that the central bank said is temporary.

Average wages in the industrial sector jumped 10.1% in May compared with a year earlier, the Statistical Office said on Friday. When Poland last had double-digit wage growth, the central bank’s benchmark interest rate stood at 6%, compared with the current 0.1%.

Double-Digit Growth in Polish Wages Highlights Inflation Risks

Central bank Governor Adam Glapinski has repeatedly dismissed calls for monetary tightening, saying inflation will eventually slow and the central bank must continue supporting economic growth during the pandemic.

The surge in wages comes as the economy reopened in May after the latest bout of coronavirus restrictions, boosting worries about demand-side cost pressures as well as growing bottlenecks in the country’s revved-up labor market.

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