The Future Inflation Index, which forecasts changes in prices of goods and services, increased by 2.4 points in June compared to the previous month, the Bureau of Investments and Economic Cycles reported. This means that there is no reason to suppose that the pace of price growth will slow down in the coming months.
Difficult to counteract
“The phenomenon of rising inflation is characterised by some kind of inertia and anchoring, which is manifested by the fact that it continues to grow for at least several months after the cessation of inflation genetic factors , and high inflation is more difficult to counteract the longer it stays at an elevated level” – explained the economists.
It was noted that the components that stopped growing were the opinions of consumers and producers about price developments in the near future. “This stabilisation took place at a very high level, not recorded for over 20 years” it says.
Over 92 percent thinks inflation will increase soon
Over 92 percent of the household representatives surveyed believe that inflation will increase in the near future . “The regrouping of a small percentage of respondents has occurred only between those who expect an even faster pace of price growth and those who believe that the pace will be at least as it has been so far” – noted the economists. They also add that none of the respondents expect prices to fall, “which is a very rare phenomenon in this type of research.”
It was pointed out that in April this year the majority of companies declaring an increase in prices over the percentage planning to lower prices in the near future exceeded. 40 percent, and in May it fell by 3 percentage points, which “does not herald a reversal of the current tendency in formulated inflation expectations”.
“For the respondents, in the conditions of such a drastic increase in prices, which they have experienced in recent months, it is difficult to imagine their further, equally rapid growth, especially since they have not experienced such high and growing inflation for over 20 years” – BIEC experts reported .
As it was noted, just like a month ago, higher yields on 10-year treasury bonds had the greatest impact on the growth of the index. “Their level has recently exceeded 7%, which reflects the difficulties with the sale of Polish debt securities and the increase in debt servicing costs”
“it was explained. This factor affects inflation in a much longer perspective than changes in the exchange rate, changes in commodity prices or inflation expectations – summarised.
Source: BusinessInsider
