Why is inflation in Poland so high? Professor Agnieszka Chłoń-Domińczak, vice-rector for science at the Warsaw School of Economics, said in “Fakty po Faktach” on TVN24 that “this is a combination of various circumstances, including errors.” She pointed out that curbing inflation means that “you really have to make sure that consumption does not grow.” Professor Witold Orłowski from the Vistula Academy and the Warsaw University of Technology spoke of a “fatal coincidence”. – This is the moment when the government will do everything but not to save, not to reduce spending – he added.
Inflation in February 2023 rose to 18.4 percent year on year, according to the Central Statistical Office (GUS). The last time it crossed the 18 percent mark on an annualized basis was in December 1996. During the year, the prices of sugar, fuel, diesel oil and heat increased the most. Compared to the previous month, prices went up by 1.2 percent.
The economic situation of Poland was discussed in “Fakty po Faktach” on TVN24 by Professor Agnieszka Chłoń-Domińczak, vice-rector for science at the Warsaw School of Economics, director of the Institute of Statistics and Demography of the Warsaw School of Economics and Professor Witold Orłowski from Vistula Academy and the Warsaw University of Technology.
Why is inflation so high? “A combination of all kinds of circumstances, mistakes too”
Professor Chłoń-Domińczak, when asked why inflation in Poland is so high, she said that “it is a combination of various circumstances, including errors”. She added that there is a certain discrepancy in what the central bank does and how the state’s fiscal policy is conducted.
As she said, “quite lenient fiscal policy” and “quite large spending” result in inflation “growing very quickly, which unfortunately affects everyone’s pockets.”
She also said that “limiting inflation is not a very easy policy, because it means that you really have to make sure that consumption does not grow.” It indicated that the consumption impulse would drive inflation. – So we are in a difficult situation, caused to a large extent by errors in fiscal and monetary policy – added Professor Chłoń-Domińczak.
Prof. Orłowski: this is the moment when the government will do everything but not save
Professor Orłowski was asked what politicians should do to improve the situation. – Wait for the elections. After all, it is known that in the coming months they will not make decisions (related to this – ed.). Unfortunately, this is probably the biggest threat at the moment in Poland. Because we are really unlucky here – said the economist.
– Because we had mistakes in the economy, there is no doubt about it. In the policy of the central bank, until recently, these errors were not great, in the policy of the government (they were) much larger. Now the central bank has caught up – he said. “When we were at a very dangerous bend, that’s when the war broke out and it squared the issues up a bit. And here the rulers, saying “Putin’s huge fault”, are right. Only two things overlapped, he continued.
According to Professor Orłowski, this is the moment when it is weighed whether in Poland inflation will fall to a low level after the inflation shock, or whether “we will wake up at the end of this year with inflation of, say, 10 percent, with the conviction that such inflation will last for years.
When asked about his inflation projections in the future, he spoke of a “fatal coincidence”. – This is the moment when the government will do everything but not to save, not to reduce spending. This is the moment when we have two paths and, unfortunately, the path that inflation will not fall at all is more likely for me, he assessed.
Main photo source: TVN24