Polish wages rise at fastest pace in years in October

Average corporate wages skyrocket up 7.4 per cent
|payroll-reporter.com|Last Updated: 11/21/2017
Shoppers use escalators as they visit a shopping mall in Warsaw, Nov. 6. REUTERS/Kacper Pempel

WARSAW (Reuters) — Polish corporate sector wages rose at their highest annual pace in over five years in October, data showed on Friday, signalling that pressure on inflation and ultimately an interest rate hike could increase in the months ahead.

The average corporate wage increased by an annual 7.4 per cent in October, its fastest annual pace since January 2012 when it reached 8.1 per cent, statistics office data showed. Economists polled by Reuters expected 6.45 per cent.

"Excluding the artificially inflated pace from January 2012 — related to payments of bonuses due to a hike in the allowance contribution — the October growth rate is highest in nearly 9 years," said Piotr Piekos, senior economist at Bank Pekao.

The statistics office also said on Friday that corporate employment rose by 4.4 per cent year-on-year to 6.04 million people in October, a tad below the forecast.

"In general, today's data strengthen the hawkish wing in the Monetary Policy Council," he said.

The 10 Polish rate-setters remain divided over how to respond to the rise in wage pressure amid record low unemployment and economic growth of nearly five percent.

While the more hawkish central bankers such as Eugeniusz Gatnar and Lukasz Hardt say a rate hike may be needed early next year, others from the more dovish wing led by Governor Adam Glapinski see rates remaining flat next year given a still moderate level of inflation.

Poland has exited more than two years of deflation in October last year and inflation has gradually accelerated since. Consumer prices increased by 2.1 per cent in October.

The central bank has kept the key rate unchanged at a record low of 1.5 per cent since a 50 basis point cut in March 2015.

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