Inflation in Poland is at levels that have not been seen for 20 years. – We expect a reaction from the central bank, and not to reassure and conjure reality once again – said professor Paweł Wojciechowski, chief economist of Employers of Poland, on TVN24. As he indicated, in recent weeks there have been three interest rate hikes in Hungary, which are also struggling with the rise in prices.
A quick estimate prepared by the Central Statistical Office shows that inflation in August 2021 in Poland amounted to 5.4%. year on year and 0.2 percent month on month. The last time inflation was higher in June 2001, when it was 6.2%. In July 2001, the increase in prices in Poland was 5.2 percent.
According to Paweł Wojciechowski, slowing down inflation will be very difficult. – As the Monetary Policy Council and the National Bank of Poland all the time bend the reality, they strike a reassuring tone – there will be no interest rate increases – explained the former Minister of Finance. The next MPC decision-making meeting is to be held on September 8.
In addition, as he pointed out, “the so-called supply effect, i.e. the increase in oil prices, transport costs, components, supply difficulties, was joined by a very strong demand impulse, which resulted from wage increases, deferred demand, people started shopping after the period of freezing the economy. “. – Companies are also building their inventories because they are afraid of high inflation – Wojciechowski pointed out.
Inflation in Poland
In his opinion, inflation expectations may anchor at a level significantly exceeding 5 percent. – All these factors mean that we are dealing with driving on steroids, that is, fueled by economic growth with high consumption, high demand – said the chief economist of Employers of the Republic of Poland.
Wojciechowski pointed out that the National Bank of Poland should act as protection against inflation. – In order to protect us from this, there should be an independent National Bank of Poland, which should not implement the government’s policy, that is, impose an inflation tax on people in order to save the budget. The budget is doing better because consumption is growing, VAT and personal income tax revenues are growing, and such a development model is not conducive to people thinking steadily about their earnings and expenses – said the former head of the Ministry of Finance.
As he noted, “in this situation it is mainly the poorest people who suffer, because they have in their basket of goods those consumer products – food and energy, which grow the fastest”. – Besides, they have accumulated savings in cash, deposits with very low interest rates, they have no possibility to look for alternative investments – he added.
Inflation – how to protect savings?
How to protect yourself against it? – Theoretically, you can say: invest in treasury bonds that are indexed for inflation, but even here there is another snag, because here is a tax on capital gains, the so-called Belka tax, 19 percent, if inflation exceeds 5 percent, you just have does not pay – said Paweł Wojciechowski.
– The poor look for supplies, companies accumulate stocks before prices rise, more affluent people invest in apartments for rent and this is how the spiral winds up, and of course we expect the central bank to react, not to reassure and conjure reality again, especially since in Hungary, where inflation is already lower, there were three interest rate increases – he pointed out. Interest rates have also increased recently in the Czech Republic.
– We are dealing with a disrespectful attitude to the inflationary phenomenon of an institution established to protect the value of the zloty – reminded the chief economist of Employers of the Republic of Poland.
Interest rates in Poland
Interest rates in Poland are currently at their lowest level in history. Last year, the Monetary Policy Council cut interest rates three times: on March 17, April 8 and May 28. The MPC recently raised interest rates on May 10, 2012.
In a July interview for “Dziennik Gazeta Prawna”, the president of the National Bank of Poland, Adam Glapiński, assessed that it would be unwise to raise interest rates before the pandemic situation becomes clear.
Main photo source: TVN24