The Polish government is now predicting that the national inflation rate could reach 2.8 percent this year, according to Dziennik Gazeta Prawna. It’s not setting off any alarm bells, however, many economists had expected prices to rise at a rate closer to 4 percent. Especially since the price index rose 4.1 percent in January alone. Dariusz Winek, BGŻ’s chief economist, says the government has consistently downgraded its inflation estimates when preparing the budget bill. On the one hand, lower inflation would help restrain welfare benefit costs, taking pressure off the public sector, but higher inflation means higher VAT revenues on the other hand. In 2010 the state pocketed PLN 107.9bn in VAT revenues.
