July inflation was most boosted by energy prices. Electricity prices rose by almost 20 percent month-on-month, and gas by almost 17 percent. Higher prices of food and alcoholic beverages also contributed to the acceleration in inflation.
Prices of consumer goods and services in July 2024 compared to the same month of the previous year increased by 4.2% (with an increase in the prices of services – by 6.2% and goods – by 3.5%). Compared to the previous month, prices of goods and services increased by 1.4% (including goods – by 1.6% and services – by 1.1%).
What drove up inflation?
The Central Statistical Office reported that in July this year, compared to the previous month, the greatest impact on the total consumer price index was exerted by higher prices for housing (by 5.7%), recreation and culture (by 2.1%) and restaurants and hotels (by 0.6%), which increased the index by 1.42 percentage points, 0.13 percentage points and 0.04 percentage points, respectively. Lower prices for food (by 0.5%) and clothing and footwear (by 3.1%) reduced the index by 0.14 percentage points and 0.12 percentage points, respectively.
Compared to the same month of the previous year, higher prices for housing (by 7.4 per cent), food (by 3.1 per cent) and restaurants and hotels (by 7.6 per cent) increased this indicator by 1.86 percentage points, 0.77 percentage points and 0.43 percentage points, respectively. Lower prices for clothing and footwear (by 1 per cent) reduced the indicator by 0.04 percentage points.
Individual components of the inflation index for July and June 2024Individual components of the inflation index for July and June 2024Data: GUS | Graphics: Katarzyna Korzeniowska
Economists agree that the acceleration Inflation is primarily responsible for partial frostbite energy prices.
“The rebound resulted from the partial unfreezing of electricity and gas prices, which increased by 10.1% on average, which increased the index by 1.4 percentage points. Additionally, prices of services, among others, are still growing rapidly – 6.2%,” they wrote in a commentary to Wednesday's Central Statistical Office data analysts of the Polish Economic Institute.
“The final data showed a detailed breakdown of the increase in energy prices (+11.8% MoM) – in July, electricity prices went up by 19.9% MoM, gas by 16.8% MoM, and hot water and heating by 0.3% MoM (in the latter category, tariff changes are not made centrally, but for each entity separately)” – commented PKO BP economists.
ING's commentary also noted that “virtually the entire increase” in the annual inflation rate in July compared to June was due to higher energy prices following the withdrawal of the energy shield.
Maciej Zielonka, an expert from the Lewiatan Confederation, also pointed to the increase in food prices, which exceeds 3 percent annually. – However, on a one-month scale, we can see that the return of 5 percent VAT on some food products, spread over installments, has already ended – the expert said.
Credit Agricole bank economist Jakub Olipra explained that the main reason for the increase in inflation was the unfreezing of gas and electricity prices in July, which increased in July by 19.9% m/m and 16.8%, respectively, which was reflected in a significantly higher dynamics of energy prices (10.1% y/y in July compared to -1.6% in June).
He assessed that the increase in inflation was also due to the higher dynamics of food and non-alcoholic beverage prices (3.2% y/y in July compared to 2.5% in June) and higher core inflation, which, according to the bank's estimates, increased to 3.8% y/y in July compared to 3.6% in June.
He added that the lower dynamics had the opposite effect on inflation. fuel prices (1.2% y/y in July compared to 1.6% in June).
Main image source: Data: GUS | Graphics: Katarzyna Korzeniowska, Shutterstock