CPI inflation reached its peak in January this year. (9.2% y / y), and the average annual inflation could not exceed 7% in 2022, if the anti-inflation shield were extended, according to Rafał Sura, a member of the Monetary Policy Council (MPC). In his opinion, the probability of extending anti-inflationary shields at least until the end of this year. is high.
“We cannot predict the development of the geopolitical situation in our region, and it affects the zloty exchange rate and energy commodity prices, which determine the CPI. Finally, the government’s position regarding the extension of the anti-inflationary shield and its scope is unknown, although in this case I am convinced that the validity of the shield will be extended at least until the end of this year. Then the average annual inflation in Poland in 2022 could not exceed 7% y / y,” said Sura.
“This scenario will be additionally supported by the unblocking of KPO funds in the coming months, which will additionally strengthen the Polish currency and make it easier for the Council to bring inflation down to around 3.5% in 2023. In this context, the opinions expressed that inflation will exceed 10% are highly unjustified, especially when they are uttered by representatives of monetary authorities,” he added.
He indicated that the path of inflation in the March projection of the central bank would not take into account the government’s anti-inflation measures after July 31 this year.
“The March inflation projection will be important as it will show the most likely scenarios and risks for their implementation, but due to the lack of legislative submissions on further anti-inflation shields, it will not be able to take into account the government’s anti-inflation measures after July 31,” said the MPC member.
When discussing the causes of the persistent high inflation, he assessed that it was global in nature and was “mainly the result of strong increases in commodity prices in world markets and prolonged tensions in global supply networks”, as well as of strong domestic demand.
“At the same time, due to the shallow and short-term recession after the outbreak of the pandemic and the rapid process of economic recovery, the economic situation in Poland is currently favorable, which is conducive to the intensification of price pressure of a cost and demand nature,” he added.
He drew attention to the strong increases in producer prices in Germany, which will also increase the PPI in Poland in the coming quarters.
“In this context, it is worth noting that in our main trading partner, Germany, in January industrial producer prices increased by 25% y / y, so the strongest since the beginning of their measurements in 1949. The most important factor behind the PPI acceleration was the rapid increase in prices. Knowing perfectly about the degree of interconnection between our economies, it should be assumed that in the coming quarters our prices in industry will be under strong pressure from prices in German industry,” Sura said.
“Nevertheless, when analyzing external and internal inflationary factors, I say that we have to prepare for functioning in the environment of increased inflation, and it is the same for the whole world,” summed up the Council member.
According to preliminary data of the Central Statistical Office (GUS), consumer inflation amounted to 9.2% on an annual basis in January 2022.
According to the central path of the November inflation projection of the National Bank of Poland, consumer inflation will amount to 4.9% in 2021, then it will accelerate to 5.8% y / y in 2022 and will amount to 3.6% in 2023. According to the projection, inflation will reach its peak at the level of 7% y / y in Q1 2022, while it will return to the band of deviations from the target (3.5% y / y) in Q2 2023. The projection was prepared under the assumption of unchanged NBP interest rates, taking into account available data until October 21, 2021 (cut-off date).
Source: ISBnews
