Poland Imposes More Price Increases; Inflation Feared

The Polish government on Friday doubled the price of electricity and tripled the cost of coal in the country’s third round of price increases since February.

The price hikes, which began with a 40% food increase, are a cornerstone of the Communist government’s efforts to slash subsidies and establish a balanced market. But the measures have sparked growing fears of runaway inflation.

Increases in the price of coal, the main source of energy and heating in Poland, have backfired in the past, causing steep price rises for all market goods despite government efforts to curb them.

Compensatory pay raises above the official guidelines--under pressure from workers in individual enterprises across Poland--have boosted inflation and aroused fears for the future of the reform program.

Communist Party leader Wojciech Jaruzelski said last week that the government was ready to seek special powers to defend the reforms against inflation if necessary.

Authorities last week froze prices of raw materials and unfinished products and are expected to use special powers to dismiss managers who grant unauthorized pay rises to their workers and cover the cost by raising output prices.

Independent economists say inflation is far higher than expected and prices have already jumped 50% this year compared with the planned 42% for the entire year.