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Does this finally give the lie to the inflationary “propaganda” being promoted by the Polish National Bank, which claims that prices have remained stagnant for months? Good, President Glabinski is right in this disputeNot the wisdom of the crowd. In fact, prices have remained at roughly the same level since May 2023.
What about these prices?
Let’s untangle this economic mess. Central Bureau of Statistics every month It collects data on more than 200,000 market prices of goods and services. Next, information about individual prices is mapped into the appropriate boxes and assigned appropriate weights. The scale system is necessary because we spend part of our income on food, another part on transportation, another part on housing, and another part on going to restaurants and cinemas. All this forms the so-called inflation basket
8.2 percent. Inflation means that the price of the aforementioned basket increased by this amount from one year to another. Does the fact that a lower CPI value mean lower prices? If not, when will they finally fall?
The answer to the first question is negative. Inflation in September at 8.2%. Compared to inflation of 10.1 percent. From August means that prices in September 2023 were 8.2% higher compared to the same period. A month ago, by 10.1 percent. Compared to August 2022 Therefore, the growth rate of prices year after year is decreasing, not the prices themselves.
Lower inflation does not necessarily mean lower prices. And here comes the answer to the second question – perhaps prices will not fall significantly at all.
What we can count on is that our salaries will adjust to current prices. Then for their growth above inflation. This has also been the norm for the past 30 years. The growth in our salaries has outpaced the rise in the prices of goods and services. In other words, we have become richer. The exception was the beginning of the 1990s and the months from the middle of last year to the first months of 2023.
Is the inflation crisis already behind us?
but how? After all, I wrote above that prices are stagnant, so what’s the point? This is the case – prices have not changed since May. In September, compared to August, we saw a slight decrease.
Please note that I previously talked about the year-on-year price index. But the Central Statistical Office also provides information on price changes from month to month. And that This indicator shows what is currently happening with prices. And what happens to them is more or less what President Glabinski says – for several months on average, we have been paying the same amount for a basket in a store.
Does this mean that the inflation crisis is already behind us? To answer this question, we have to look at the source of the inflation that the world has been facing for the past two years. So let’s do a quick review of what are called inflation pulses
Prices started rising shortly after the start of the Covid crisis, or more precisely, since the lockdowns. This brought factories to a standstill, leading to massive disruptions to supply chains.
Due to lockdowns, many of us have accumulated significant savings. This is especially true for the middle class, which has turned to home offices. She was earning as much as before, but she could no longer spend as much as before because hotels and restaurants were closed. In addition, coronavirus shield funds have hit the market.
When restrictions began to ease, companies wanted to recover losses as quickly as possible. This led to a huge demand for energy, especially from China, which led to higher prices for raw materials. Hotel and restaurant owners wanted to compensate for the dry months. When it seemed like everything was more or less under control, Russia invaded Ukraine.
This, in turn, led to higher prices for energy raw materials. This has exacerbated previous shocks and created an inflationary “perfect storm” that has, economists say, dampened inflation expectations. In other words: people are accustomed to high prices. And Since they have money hidden away, companies can raise prices, knowing that consumers will spend the money anyway.
The voice of the Polish Economic Institute sounds interesting here, as it asked Polish companies to raise prices. as it turned out? In 2022, prices increased by 74%. Products and services provided by the companies included in the study.
What are the main reasons for the increases according to companies? An increase in the costs of raw materials, semi-finished products and components was noted by 84 percent. Companies increase prices. The following were: increase in energy prices (68%), increase in labor costs (63%), and increase in administrative costs (45%).
But they also included: the fact that competition led to higher prices (43%), higher demand (28%), and social approval of higher prices (21%).
The Polish Development Fund, in its report on Poles’ savings, refers to what I mentioned previously: In 2020, our cash savings suddenly started to grow. But around the second quarter of 2022, it will start to melt just as quickly. This has been a savings hill that companies can use to raise prices for months. Some of them raised it just because they could.
A similar scene emerges when it comes to our savings from CBOS Bank Research. In 2007, only 23% had savings. Captivity. From one study to another, there was a clear and clear upward trend. In 2020, this percentage began to decline. In March 2023, it dropped to 54%. Around that time, the Central Statistical Office released data showing that prices had stopped rising. Meanwhile, until May 2023, prices were rising faster than wages – and we were simply getting poorer.
In September, Kantar, commissioned by TVN channel Fakty, asked Poles how they deal with inflation. Nearly 70 percent reported that they reduced their expenses due to higher prices.
Meanwhile, the initial inflationary impulses began to subside: supply chains were rebuilt, money from the shields spread throughout the market, and the situation in the energy market returned to normal. What else happened? Companies noted that there is no scope for further increases. Among other things that is why prices stopped rising.
Does this mean the end of inflation? Prediction is difficult, especially when it comes to the future, said the classic. There are some variables that may form new inflationary drivers, although not as strong.
On the other hand, VAT on food is still zero, and is scheduled to be abolished at the end of 2023. Businesses will almost certainly pass on the tax increases to customers. Although prices may indeed rise in the coming months, we should not fear a repeat of the inflation fluctuations of early 2022 and 2023. Let us hope that we will enjoy at least a little more peace in the economy in the coming years.
Kamel Fajfar, journalist and labor market and social gap analyst
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