August 27, 2018 / 10:13 AM / 3 months ago

Poland expects drought to have minor impact on food prices

WARSAW (Reuters) - Droughts that hit Poland over the last few months were not severe enough to inflate food costs significantly, but prices of grain used in bread may rise more than 10 percent, Agriculture Minister Krzysztof Ardanowski said.

According to state meteorology institute IMGW, Poland experienced above-average temperatures in April-July, while the amount of rain was extraordinarily small. Some farmers feared they may lose part of their agricultural production.

A sizzling summer has damaged crops in the European Union, leaving some farms struggling to survive.

“I don’t think the drought will translate significantly into food price hikes ... Some crops were saved thanks to the intensive rains in recent weeks,” Ardanowski told Reuters.

But grains used traditionally in bread-making have suffered and a production decline of more than 10 percent will translate into price rises of around 5-15 percent, Ardanowski said.

Inflation in Poland remained at 2.0 percent year-on-year in July, below the central bank target of 2.5 percent, even though economic growth in Eastern Europe’s biggest economy amounted to 5.1 percent in the second quarter.

In October Poland will hold local elections, a test for the ruling eurosceptic Law and Justice (PiS) party, which remains top in opinion polls. PiS has earmarked 800 million zloty (£169.3 million) so far to help farmers cope with drought.

Reporting by Anna Koper and Pawel Sobczak; Writing by Marcin Goclowski; Editing by Dale Hudson

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