A slump in the mood of Poles. The prospects for the future have not been so poor for months

The Office asks in the survey, among other things, about the assessment of our current financial situation and the country's economic situation, as well as predictions for the future. It also asks, among other things, about our feeling of inflation (and forecasts for the year ahead), examines fears of unemployment, possibilities of saving money and readiness to make “important” purchases (i.e. “larger” – the Central Statistical Office gives as examples purchases of e.g. furniture or electrical and electrotechnical equipment).

Consumer sentiment deteriorates in July

Unfortunately, the latest data from the Central Statistical Office on the consumer sentiment of Poles indicate a fairly clear deterioration. The current Consumer Confidence Index – which includes both our assessments of the past twelve months and predictions for the next year – at the level of -14 points is the lowest reading this year. The differences may not be huge (BWUK fluctuates between -14 and -11.5 points this year), and in general our moods are still better or significantly better than almost the entire time since the outbreak of the pandemic in 2020. Despite everything, there is no trace of the upward trend from 2023.

The situation is interesting because we look at the current situation really well – assessments of changes in the financial situation of our households in the last 12 months are the best since the outbreak of the pandemic, assessments of changes in the economic situation in the country are also among the best. Our willingness to make important purchases is the highest in almost three years. The general assessment of the current situation of the household (whether we make ends meet, whether we can save something or rather get into debt) is the best since at least the beginning of 2018.

It's not surprising: in the first half of the year, we had a double-digit (year-on-year) rate of growth in wages in the economy – driven not only by “top-down” increases (a large increase in the minimum wage, increases in the budget sector and for teachers), but also in the corporate sector in higher pay segments. In addition, in January there was a raise of 500 plus to 800 PLN, in March there was an over 12 percent indexation of pensions and retirement benefits. And all this happened during the lowest inflation in several years (average of about 2.7 percent year-on-year for the entire first half of the year), so the disposable income of millions of Poles grew rapidly not only in nominal terms, but also in real terms.

However, everything falls apart when we look to the future. This is what the Leading Consumer Confidence Index says. It is a measure of our expectations for the next 12 months. WWUK in July was -11.6 points, which was the worst result since June 2023, i.e. more than a year. Again: the differences may not be drastic (WWUK set its maximum last year in January, at -3.8 points), but they do exist.

The Central Statistical Office data indicate that Poles' predictions about the change in their financial situation are the worst since June 2023. We have not thought with such great concern about Poland's economic situation since August 2023. Since January 2023, we have not had such poor premonitions about the pace of price growth over the next year, and since March 2023 – in terms of the increase in unemployment.

Some of these fears are of course based on reality. Indeed, after very strong disinflation in 2023 and stabilization at a fairly low level in the first half of 2024, Inflation will increase significantly in July (from 2.6% in June to around 4%). What's more, by the end of the year it could be around 5%, and in the first months of 2025 it could exceed 6% and only then fall. These are NBP forecasts, taking into account the partial unfreezing of energy prices from July and the entire one from the beginning of 2025. The increase in inflation will be compounded by the lower (although still very decent!) dynamics of wages.

On the other hand, for example Fears of a significant increase in unemployment are not based on reality. In principle, all available measures indicate that the situation on the Polish labor market is and will remain good. Yes, we can talk about lower demand for employees, but there is no talk of “mass” layoffs on an economy-wide scale. More companies are still planning to hire than lay off, and the expected improvement in the economic situation should, over time, increase companies' recruitment plans. Another matter is that voices, for example, about the Polish and EU economies losing competitiveness (due to, among other things, the increase in labor and energy costs) may of course raise concerns. You can learn more about the situation on the labor market from the material below:

Forecasts also indicate that, despite everything, the Polish economy is picking up after the stagnation of 2023. For now, mainly on the strength of consumption, but in 2025 the investment engine should turn on with a flourish (this is, among other things, the KPO effect). Everyone is also counting on a (unfortunately delayed) rebound in industry. Concerns about the country's economic situation may be raised by information, for example, about the excessive deficit procedure launched by Brussels against Poland. In short – increased spending, among others on defense, health care and servicing of the public debt, will mean that in the coming years there is probably no point in counting on any great social “fireworks” (although there should be no deep belt-tightening either).

It is interesting to note that – according to the latest study by the Central Statistical Office – the deterioration in predictions about our and the country's near future has not yet translated into any increase in caution. The willingness to make important purchases in the next twelve months is the highest since the pandemic. Despite the worse moods, we still have a slight advantage of people who expect to save something in the next year.