Housewife Joanna Bialas remembers lining up for her sugar ration during the communist era. In April, she found herself in the sugar queue again, but for an entirely different reason. 'Everyone was worried that prices would rocket after Poland joined the European Union, so we joined the crowds in the grocery store to stock up on food,' said the 47-year-old woman from Katowice in southern Poland. Ironically, the stockpiling that preceded Poland's accession to the EU helped to achieve what consumers feared the most. 'Prices are going up, especially for sugar, fruit and meat, but wages have not changed,' said Ewa Kapinski, who runs an apartment rental company in Krakow. Poland, the biggest of the 10 new EU nations, saw annual inflation hit 4.4 per cent in June, around 21/2 times the January rate and well above the central bank's 3.5 per cent target. National Bank of Poland data shows the price of rice jumped around 28 per cent between mid-April and the end of last month, beef and poultry 22 per cent and butter 13 per cent. Analysts warned the worst is yet to come. Inflation is expected to peak next month, before falling back to between 3 and 4 per cent by year's end as the prices of goods like bread begin to fall. The central bank lifted interest rates by a higher-than-expected 0.5 per cent on June 30, as it struggled to contain the inflationary impact of accession. The dismantling of customs borders is also underpinning demand from other EU nations, which see Poland as a cheap source of goods like meat and dairy products. While farmers are enjoying the demand-driven price gains, many urban consumers are calling for wage hikes. Meanwhile, Poles can enjoy the benefits of increasing economic activity. The economy, which grew by 3.5 per cent in 2003, is currently growing at around 6 per cent and is expected to remain in the 5 to 6 per cent band until year's end. For Tomasz Walczyk, a Krakow tour guide, gains like these make inflation a small price of accession. 'Joining the EU lifted Poland's image. It is now easier to cross the border, and prices are still relatively cheaper than other EU nations.'
