Price increase in Poland – when did it start and did the central bank and the government notice this beginning, and if so, did they react properly? The analysis of the Monetary Policy Council helps to answer these questions. The conclusions contained in it are unfavorable for the authorities, because they question its constantly repeated thesis that the record-breaking inflation in Poland is a matter of the pandemic first, and then of Putin.
On the facade of the National Bank of Poland, it was reported that inflation was the fault of the pandemic and the war in Ukraine. Now, however, the central bank admits that these factors were not necessarily the only factors that contributed to the increase in prices.
– The problem of inflation, internal factors of inflation in Poland, started in 2018, and was already strong in 2019 – points out the economist Marek Zuber.
This is confirmed by the document “Price rigidity measurement based on GUS unit data”, fragments of which were obtained by journalists of the money.pl portal. – This is a very expert document, which is of interest to a small group of experts and certainly has an impact on how the central bank perceives inflation processes – explains Ignacy Morawski, an economist.
The document shows that the price increase spiral was already in 2019 – a year before the economic shock caused by the Covid lockdown and three years before the start of Putin’s invasion of Ukraine. – When I hear that there are no Polish inflation factors, or they are negligible, this is simply not true. And this report indicates that the National Bank of Poland must have been aware of this in 2019 – says Zuber.
Then, within 12 months, inflation increased from 0.7 percent in January to 3.4 percent in December – and this is more than in similar countries in the region – in the Czech Republic or Hungary. In February of the following year, the increase in prices reached 4.7 percent. It is worth recalling that the level of inflation acceptable by the NBP is 2.5 to 3.5 percent at most.
Could the situation have been remedied?
Internal factors – as indicated by economists – are primarily high labor costs and social distribution. For example, the Monetary Policy Council did not decide to raise the level of interest rates, although such a motion was made for the first time in July 2019, but it was passed.
– Due to the ineffective, late and also abandoned activities of the Monetary Policy Council and the National Bank of Poland since October last year, we have inflation spreading all over the economy – assesses Dr. Małgorzata Starczewska-Krzysztoszek, an economist.
Professor Joanna Tyrowicz, economist, member of the Monetary Policy Council, referred to the inflation data in April in “Fakty po Faktach”. It indicated that inflation could be curbed by monetary policy. However, the rulers and the majority in the NBP chose a different path – they started a campaign shifting the responsibility to lockdowns, and above all to war, and depending on the political option to other factors.
– Putin and the policy of the European Union are responsible for inflation. Climate policy, Fit for 55 – thinks Marcin Warchoł, Deputy Minister of Justice, MP of Sovereign Poland.
Economist Marek Zuber points out, however, that the NBP reacted properly both before and after the occurrence of internal factors. – In this sense, these situations are similar – just as there was no reaction in 2019, it was not decided to react quickly later, when these external factors came to light – he points out. The result was inflation at a peak of over 18 percent year on year and high prices that will stay with us for a long time.
Main photo source: TVN24