Inflation in Poland. What and when will the peak of inflation be? Piotr Arak, director of the Polish Economic Institute, comments

As it follows from poll Kantar for “Fakty” TVN and TVN24, 74 percent Poles had to reduce their spending recently due to rising prices. One-fourth of the respondents did not limit their expenses, while 1 percent did not. of those questioned have no opinion. Piotr Arak admitted that he was not surprised by the results of the poll. – I am not surprised that part of the society is now deciding to take such steps, because it is logical – said the guest of the TVN24 program “One for One”.

– The situation is that we are entering an economic slowdown. Poland, like basically all countries in the world, is in this situation a bit of crisis management. We have the highest in Europe, the United States and our country inflation for several dozen years. This causes quite a lot of problems, in such a situation monetary policy means tightening, i.e. raising interest rates, which in turn also causes some problems for some people who have loans – said the director of the Polish Economic Institute.

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The data of the Central Statistical Office show that inflation in July this year. was 15.6 percent. Every year. For comparison, in June the prices of goods and services grew at the rate of 15.5 percent. Every year. Piotr Arak in the TVN24 program “One for One” was asked about the forecasts for the peak inflation in Poland.

– Our macroeconomic team expects the summit should be in August. That should be around 15.5-15.7 percent, which is below 16 percent. Most macroeconomic teams forecast this month similarly, Arak said.

– The first signal for this is the so-called producer inflation data, which fell month-on-month (…), which would show that we are reaching the peak of inflation readings more or less in July or August – he added.

The PIE director stated that “later we should come down to maybe 10 percent by the end of this year.” – The inflation index started to rise last fall, therefore this comparative base is completely different and therefore we should not expect such high inflation readings – explained Arak.

The head of the PIE was asked if there was a feeling that more could be done in the fight against inflation in terms of the policy pursued by the National Bank of Poland. – I can’t imagine what else the central bank could do. It has been gradually increasing interest rates since last fall, ‘he replied.

Taking into account that the NBP may have started the rate hikes cycle too late, Piotr Arak noted that “this is a topic that is widely discussed”. – Overall, in the middle of last year, both the Federal Reserve (the American equivalent of NBP – ed.) And the European Central Bank were criticized for saying that inflation is temporary. Back then, the two most important bosses, Christine Lagarde and Jerome Powell, said that inflation was temporary. This communication of the most important central banks prompted other countries to decide on subsequent interest rate increases – pointed out the guest of the TVN24 program “One for One”.

He also pointed out that the ECB decided to make the first rate hike “only in the middle of this year, with inflation in the Baltic states reaching over 20 percent”.

Watch the entire conversation on TVN24 GO

Already into the COVID-19 period, Arak noted, “we entered with elevated inflation rates that remained high throughout the pandemic period.” – On the other hand, the (Polish) central bank, like all the others, had to decide on lowering interest ratesin order to reduce the shock caused by the pandemic, which was of a supply and demand nature, said the director of PIE.

In this context, Piotr Arak was asked about the later comments – after the first and second wave of the pandemic – of the NBP president Adam Glapiński on inflation forecasts or the level of interest rates. – It is so that many people expected that the inflation that would result from this crisis, due to the supply crisis we dealt with in 2021, delayed demand, i.e. the fact that a large part of consumers after this period of lockdowns more often started going to restaurants, some companies started to increase price lists and values ​​of products or services, wanting to compensate for the costs associated with lockdowns and reduced consumer interest. And it was quite natural, it was calculated that there would be some inflation boost, but no one predicted that there would be a war, that there would be Russian energy blackmail, he explained.

– The decisions taken by the central bank at the moment and in recent months are appropriate. So is the central bank’s reaction to a pandemic, ‘added Arak.

Asked about the style and behavior of President Glapiński, the director of PIE said: “I am not to judge what he does and how”. – Decisions, method of communication, conversation with the market, press conferences that are held are similar to what is happening in other countries – said the guest “One for One” on TVN24.

– President Glapiński, if someone reads what he has been publishing for years, his books on economic and economic thought are a different color. It cannot be denied that our head of the central bank can tell stories and express himself in a colorful way – summed up Piotr Arak.