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December inflation. Comments by Kazimierz Krupa and Dr. Małgorzata Starczewska-Krzysztoszek

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Certainly, there are no reasons to be satisfied – explained Kazimierz Krupa, economic journalist, managing director of Drawbridge, commenting on the latest inflation data on TVN24. In his opinion, “every month we will be poorer”. Dr. Małgorzata Starczewska-Krzysztoszek from the University of Warsaw referred to the increase in salaries. – If we compare the average salaries in micro-enterprises and slightly larger companies, the salaries there are significantly lower and grow slower, if they grow at all, she noted.

Inflation in December 2022 it amounted to 16.6 percent year on year, according to the Central Statistical Office (GUS). This result is in line with the initial estimate. By comparison, inflation was 17.5 percent year-on-year in November.

Inflation in PolandPAP/Maciej Zielinski

The guests of TVN24 were Kazimierz Krupa, economic journalist, managing director of Drawbridge, and Dr. Małgorzata Starczewska-Krzysztoszek, economist, lecturer at the Faculty of Economic Sciences of the University of Warsaw. They were asked to comment on the latest inflation figures, which stood at 16.6 percent year-on-year in December 2022. – I am definitely not satisfied – commented Kazimierz Krupa on the air.

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Read more: There are new data on inflation in Poland. The prices of sugar and fuel rose the most

There is no reason to be happy

– Because it is as if a person had a temperature of 39.5 degrees, and it dropped to 39. There is supposedly progress, because it is better than if the temperature rose. Certainly, there are no reasons to be satisfied, he explained.

He added that “inflation is accumulating.” – The image on our market is very blurred, mainly due to the influence of guests from Ukraineof which there are two or three million at the moment. Well over eight million people have crossed our border. They had to eat something here, buy something, so the purchasing power is disturbed – he presented.

He noted that “disposable income on a Polish farm is crucial.” – According to research, it is falling to a small extent, but in my opinion this is blurred by guests from Ukraine who increase this demand very significantly – he said.

Consequences of interest rate increases

In the opinion of Kazimierz Krupa, “we will become poorer every month”. He explained that December inflation is at the same level as in November, but “prices are not falling”. They’re growing, just a little slower. Therefore, every household feels it more and more, because the cumulative effect, in short, the resources that were, is slowly depleting and it will get worse with each passing month, he said.

In his opinion, “this is only a political matter and only political announcements.” – Inflation target of 2.5 percent. At the moment we are at 16.6, core inflation over 11, i.e. this inflation in December fell more than a little for external reasons, i.e. lowering commodity prices on global markets – he emphasized and added that “the effects of interest rate increases“.

He explained that “the mortgage is dead”. – People do not want to take short-term loans either, because their cost, not even in parabanks, but in normal banks, is unimaginably high. Households behave rationally. If the government and the National Bank of Poland behaved rationally, fighting inflation on their part, i.e. the domestic, base part, which is extremely high, then there would be a chance that everything would start to improve, Krupa said.

We buy cheaper products

Dr. Małgorzata Starczewska-Krzysztoszek noted in an interview on TVN24 that households significantly reduce their consumption.

– Dynamics, slightly lower inflation for the second month in a row, proves that if the prices of goods are rising, but they are growing slightly slower than it was until October, it means that households are significantly reducing their consumption. They will reduce purchases of durable goods, i.e. goods. However, there is certainly a change in the structure of food in this. We buy less and buy other food products, a little cheaper – she emphasized, adding that the point is to tighten the budget.

She noted that “every month this price dynamics was higher and higher. It seems that we can assume that in the first part of this year 2023 we will have rising prices for services.”

– Since January, the minimum wage has increased significantly, from July there will be another increase. And services, however, are largely based on human labor. If the cost of remuneration increases, it will have to translate into the prices of services. Rising prices are to be expected here, she predicted.

The economist also commented on data from the Central Statistical Office about the increase in salaries, commenting that the office provides average data. – These are data on employees employed in small, medium and large companies, excluding micro-enterprises. That is, where there are at least 10 people employed. If we compare the average salaries in micro-enterprises and slightly larger companies, the salaries there are significantly lower and grow more slowly, if at all. That’s why some of us feel that inflation is rising, that prices are rising, she said.

Read also: Reverse raises. What increase in wages and employment?

Main photo source: Shutterstock

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