Polish inflation above expectations as central bank eyes rate hikes' end

Sept 30 (Reuters) - Inflation in Poland accelerated faster than expected in September to reach above 17%, flash data showed on Friday, keeping pressure on the central bank as it seeks to bring its year-long rate hike cycle to a possible halt.

Central Europe's inflation rates are at multi-decade highs and companies are seeing massive cost increases on the back of an energy crisis in Europe, sending electricity bills soaring.

In Hungary, data on Friday showed producer prices jumped a whopping 43.4% year-on-year in August, highlighting the pressure companies are seeking to pass on to consumers.

The Polish inflation rate reached 17.2% year-on-year in September, above a Reuters poll forecast of 16.5% and the highest in a quarter-century. PLCFY=ECI PLCPIY=ECI

On a monthly basis, prices rose 1.6%, the highest since May. PLCFM=ECI

"What is worrying is a further rise in core inflation to around 10.5%, which may show that (an) energy and food shock is spreading heavily into other categories," Urszula Krynska, an economist at PKO BP, said.

"The Monetary Policy Council will not end interest rate hikes as it wanted. It should raise rates at the next meeting, and now we are talking at least 25 basis points."

Polish Governor Adam Glapinski said earlier in September the bank could opt for a small rate increase or even hold rates when it decides on policy on Oct. 5.

After a year of heavy interest rate hikes in central Europe, central bankers are looking to cool tightening cycles as economies face recession risks.

But inflation is still to peak and global central banks like the U.S. Federal Reserve are ramping up rate hikes, putting emerging market currencies under pressure and complicating the job of the region's policymakers.

Hungary's central bank on Tuesday lifted its base rate by 125 basis points to 13% and ended its more than year-long rate hike cycle. On Thursday, though, the forint EURHUF= hit a record low as markets sold off on gas worries.

The Czech central bank also kept rates steady at 7.00% for a second time in a row on Thursday and said it would continue to intervene against swings in the crown.
Reporting by Jason Hovet in Prague and Anna Wlodarczak-Semczuk in Warsaw Editing by Shri Navaratnam

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