Due to rising electricity and gas prices, we will spend less money on food. Food prices are rising, so we have to limit our food expenses and think about what to buy and what to give up. Possibly, reduce the quality of the products we buy, because they are a bit cheaper, said Dr. Małgorzata Starczewska-Krzysztofoszek, an economist from the University of Warsaw, on TVN24.
The quick, preliminary estimate prepared by the Central Statistical Office shows that inflation in September 2021 in Poland it was 5.8 percent year on year. In monthly terms, the prices of consumer goods and services increased by 0.6 percent. Analysts predict that “in October we will be six in the front”.
Inflation in Poland – what awaits us?
Starczewska-Krzysztofoszek pointed out that electricity, gas and garbage are “fixed elements in our home budget”. – We can turn off the light when we don’t have to use it, but we won’t switch to kerosene lamps. In winter, we have to heat the apartment, whether we have it from a combined heat and power plant, or gas, which will cost much more. These are the costs we have to bear. You can’t save much here. What does that mean? That in our portfolio we will have to allocate more and more funds to what we cannot eliminate – said the economist.
She emphasized that due to this, there is less left for other things in our wallet. – These “less” are spent mainly on food, so if food prices rise, we have to limit our expenses on food and think about what to buy, what to give up, or possibly reduce the quality of the products we buy, because they are a bit cheaper. This is a challenge for households – said the expert.
Rising prices – a challenge for entrepreneurs
The economist said that high inflation will also be a challenge for entrepreneurs. – Prices for raw materials for production, materials for which entrepreneurs pay, are growing much faster (than the inflation rate of 5.8 percent year on year – ed.). Their costs are rising faster. In addition, salaries are increasing. (…) Entrepreneurs begin to strongly feel the wage pressure. If employees hear that prices are rising, that politicians are raising their salaries by 40 to 70 percent, and their salaries do not increase or that they have increased by 5 percent, then they say: what about us, we also want – explained Starczewska-Krzysztof.
She added that “this wage pressure will translate into wage increases” and stressed that “we have entered a very difficult period”.
Interest rate hike – consequences
The Monetary Policy Council at its one-day meeting on October 6 unexpectedly raised interest rates.
Starczewska-Krzysztofoszek pointed out that loan installments would increase due to the decision of the MPC. – Maybe it will not be a lot – as we estimate, for each PLN 100,000 (mortgage loan – ed.) Per month it will be up to PLN 15 more interest. If we add rising prices to this, our wallet starts to shrink on all sides. And at the same time, if we have savings on our savings accounts, there will be no more to the next interest rate hike – said the economist.
In her opinion, the MPC decision was “very late”. – This signal increase in interest rates should take place from the beginning of this, if not the end of last year. So that those who are to make the decision and who made the decision to take out a loan would know what to expect. I have the impression that not all who take out a loan are aware of the fact that interest rates may increase and the cost of the loan taken may be much higher than the one they started paying when they took out a loan – emphasized the expert.
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