Polish April wage growth data surprised on the upside, may help delay rate reduction cycle

Poland’s labor market data surprised on the upside in April, with solid of job witnessed in transport, manufacturing and trade. Wage growth accelerated 4.6% y/y last month as compared with consensus projection of 3.8% growth. Poland’s wage growth, adjusting for seasonal effects, expanded to almost 4%. This is in line with the country’s falling jobless rate, noted Commerzbank in a research report.

However, the bottom line is the Poland’s wages have been steadily increasing for some time now; nonetheless there has not been any marked pass-through to CPI inflation. There has been constant imported deflation. This is unlikely to change soon; particularly when the Poland’s economic growth momentum has started to slowdown. But the wages data can still bolster the MPC hawks’ hand and provide a delay in beginning the rate cutting cycle that is expected to start in the third quarter, added Commerzbank.