The inflation in Poland will keep going up according to an expert. Prices of grains, oils and everything that contains them will rise. The waiting time for cars and their prices will probably increase.
But the growth rate of food prices may be lower if the Polish government decides to extend the anti-inflationary shield.
“I suspect that in conditions of high inflation, this is exactly what will happen,” says Marcin Klucznik, an expert from the macroeconomic team of the Polish Economic Institute (PIE) in a interview.
What increase in commodity prices can we expect in Poland ?
Marcin Klucznik, PIE: “According to our latest forecast, inflation will exceed 10%. in April or May this year.
The rapid increase in prices will also remain with us in the second half of the year. This means that the recovery from the period of high inflation will be slower than economists predicted a few weeks ago.”
And this forecast already takes into account the effects of the war?
“Partly, but the uncertainty as to the further development of the situation is great. Our forecast before Russia’s invasion of Ukraine assumed that inflation would reach 9-9.5 percent at its peak in April-May.
In recent days, we have raised our inflation forecasts by over 1 percentage point.”
Don’t you think that 10 percent. is this still an underestimated forecast? That the influence of the war on prices could be even stronger?
“Of course it could be stronger. For now, we are faced with too much uncertainty as to possible events, e.g. in the gas market, but also in the food market.
We know that food prices will grow rapidly – both Ukraine and Russia are its global exporters. These exports will either end or at least be significantly reduced.
Russia is also the world’s largest exporter of nitrogen fertilisers. Earlier, we expected that the export of this commodity would increase in June, which would partially limit the rise in food prices.
The sanctions imposed on Russia have made this forecast obsolete – the shortage of fertilisers will further boost food prices around the world.
And, of course, gas prices – the war drastically rocked the market prices. We do not really know, however, how this will translate into household prices in Poland – it will depend on the tariff decisions of the Energy Regulatory Office.”
To sum up: based on currently available information, a breakthrough of 11%. Inflation is most conceivable – and it is possibly that the inflation rate will be even higher!
13% or even higher inflation rate in Poland!
“Our main forecast is for inflation to peak at 10.2%. in May this year. On the other hand, the uncertainty about the future economic situation is at a record high today – we take into account the dynamics of 12% or even 13%, but it may be even more in the event of extreme events. Inflation will surely be high and will be felt socially.”
What will be an extreme event more than the war itself?
“This would be, for example, a decision of the European Union to completely suspend the purchase of energy resources from Russia, in connection with the lack of the possibility of replacing supplies – only some EU countries currently have the infrastructure ready to purchase LNG gas.
This scenario does not have to come true – the International Energy Agency has just announced a plan to reduce the EU’s dependence on Russian gas” (Poland is already working on that -ed.).
Germany is just announcing the construction of LNG terminals
“Germany is not in the worst situation yet, because it has gas storage facilities, so it would be able to secure itself in some way.
But Finland, for example, today has no capacity to store gas or to diversify its supply effectively.”
Will electricity prices go up in Poland yet?
“This is difficult to predict because energy tariffs are regulated by the Energy Regulatory Office, which does not communicate its intentions, and it is very difficult to predict their decisions under the current conditions.
It would be good if the Energy Regulatory Office spoke out on this matter and suggested what the future of tariffs on the energy market in Poland might look like.”
Which goods in Poland will become more expensive?
“Food will surely become more expensive – we forecast that the dynamics of food prices will certainly exceed 10% this year, and in some months it may exceed 12%.
The prices of cereals, oil products and everything containing them will rise the fastest. We are already experiencing higher fuel prices – this is the effect of a surge in oil prices. I have already talked about energy prices.
Cars will be more expensive in Poland
In addition, we should expect an increase in the prices of some products, the trade of which will be particularly heavily disturbed in connection with the war. Cars are a good example.
After all, car factories have had problems with access and shortages of microchips in recent months. Now these downtimes are starting to increase, because the war broke the supply chains – Ukrainian factories supplied some components to Germany.
This means that the waiting time for cars and their prices will probably increase even more.
The growth rate of food prices may be lower if the government decides to extend the anti-inflationary shield.
We do not include this in the forecast for the time being until it is officially announced by the government. However, I suspect that this will be the case in conditions of high inflation.”
With what and where can we supplement the current import from Russia or Ukraine? What other sources can you draw from when it comes to non-energy goods?
“Import from Ukraine and Russia to the European Union countries is about 4 percent. all food imports in the EU – the conflict does not therefore pose a threat to the food security of the EU.
This will largely be replaced by imports from China, the United States and South America. We will probably feel that some of the products will be a bit more expensive, due to sectoral shortages of some oils, bulk of cereals, which were often imported from eastern directions.”
Will the Polish economy be influenced in any way by the decisions of foreign companies resigning from economic cooperation with Russia and Russia?
Are Polish companies – e.g. sub-suppliers of machine parts or manufacturers for a large furniture chain – involved in this supply chain enough to be affected by global decisions on the Russian market?
“Polish exports to Russia and Ukraine total 5 percent. Part of this sale is likely to be transferred to other countries. The survey of Polish entrepreneurs conducted very recently did not show that they were extremely worried about their position as a consequence of the war.
However, the situation is so dynamic that it is difficult to predict what may be released in a repeated survey in a few days or weeks.” says Marcin Klucznik in the end of this interview.