The aim of the paper is to investigate the long-run relationships between wages, prices, labour productivity, exchange rate and other variables in the Polish economy in the period of transition by applying recent developments in the field of multivariate cointegration analysis. In particular it draws on the results obtained by Greenslade, Hall and Henry (1999) and follows similar modelling strategy. The investigation is based on the monthly data from 1993.02 to 2000.06. The empirical results allow to conclude that costs were one of the main forces driving inflation in Poland in this period.