The Future Inflation Index (WPI), which forecasts several months in advance the direction of changes in consumer prices in January 2023, declined by 1.4 points from the previous month’s quotation. This was the sixth consecutive decline in its value. In previous months, the decline in the index was determined by external factors resulting from lower prices for basic commodities in global markets. Today, the lower values of the index were mainly determined by consumer inflation expectations.
This was the component acting most strongly towards the decline in the WPI in January 2023. The decline in consumer inflation expectations was not influenced by the slightly lower-than-expected preliminary CPI readings for December of last year, which were already released after the survey was conducted. Also unaffected were the effects of electricity and gas price increases implemented since January this year. These will not be revealed in the survey until February or even March this year at the earliest. In the December survey, the index of consumer inflation expectations fell by 6.5 points compared to November. This is a significant positive change in the value of this indicator. However, an analysis of the distribution of responses shows that consumers mostly expect inflation to be fixed at its current high level, and much less expect it to actually fall, i.e. to increase prices at a slower rate.
Only 22% of respondents expect prices to rise more slowly in the near future than before. More than 62% of respondents believe that price increases in the near future will be faster than before or the same as in recent months. Consumers do not expect prices to fall. This response option was chosen by only 1% of respondents. Overall, nearly 85% of respondents expect prices to rise in the near future, regardless of the rate of price increases. This is obviously an improvement over the situation last March, when 90% of surveyed household representatives expected prices to rise. However, this is still high and higher than the average for the European Union countries, where about 76% of respondents expect prices to rise.
The expectations of entrepreneurs in the manufacturing sector about prices in the near future are somewhat different. As with consumers, the highest propensity to raise prices was recorded last spring. At that time, the advantage of companies planning to raise prices over those planning reductions reached 40%. Currently, the advantage has melted to 27% and has not changed much in the last three months. This trend prevails in most of the industries surveyed by the CSO, with the exception of those characterized by high energy intensity, such as machinery and equipment manufacturing, production from non-metallic raw materials, and the chemical industry. Entrepreneurs are most likely being forced to raise prices by the rising costs of energy, gas and the increase in the minimum wage, which is intensifying wage demands among workers who earn higher wages but have higher, often specialized skills. By size of manufacturing companies, the smaller the company, where the share of fixed costs is relatively higher and there is less bargaining power in price negotiations, the higher the propensity to raise prices in the coming months
The raw material price index published by the IMF last December increased slightly compared to November and October of last year. Contributing to this was a slight increase in the prices of some nonferrous metals. Prices of energy and food commodities remained unchanged, fertilizers definitely cheapened.
Thanks to the drop in the price of crude oil and the simultaneous slight strengthening of the zloty against the dollar, purchases of this raw material for domestic processors cheapened, which is of little significance for the retail price of gasoline under the conditions of PKN Orlen’s monopolistic position.
Source: BIEC Biuro Inwestycji i Cykli Ekonomicznych
